Spend Less Than You Earn!

You would think that this is common sense but with the availability of credit cards, line of credit, overdrafts and etc, many people forget how much of the money that is available actually belongs to them. By this I mean – money that you have earned and if you were to use it, you will not be penalised or charged an interest on it.

People spend their “future” money and ignore the need to budget and being careful with their money. Admittedly, budgeting, cashflow and what not are really boring and we would rather be out shopping than talking about these jargon. To be honest, no one has the time and energy to collect receipts and calculate how much we have spent. The news does not get any better when we find out that we have spent a chunk of our fortune on crap – down goes the morale; up goes the debt and around the vicious cycle we go again. Sounds familiar?

So, pick a day that you are feeling good about yourself and figure out how much you really have after taxes and fixed expenditure. Treat this as an easy guide to budgeting and all you need is the following:

1. Pen or pencil
2. A sheet of paper
3. Calculator
4. Rough approximation of the monthly fixed expenses that you incur.

This is a rough sketch I drew up for myself

Step 1:

Add up all your income in the left hand side column ($A)

Step 2:

Add up all your expenses in the right hand side column ($B)

Step 3:

Take $A – $B and this will give you either a positive or negative number.

Positive = amount of money that you can spend after paying off all your expenses.

Negative = Honey! You need to start getting smarter with your money and start budgeting. I suggest not spending on clothing and cut down on entertainment. These are the easiest way to increase your budget.

If you do not like to use the primitive method of pen and paper, you can utilise excel on your computer or start using tools such as ANZ Money Manager or SmartyPig to help you kick-start today.

Happy budgeting!

~Jess