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From rising interest rates to rising prices at the grocery store.
From rising interest rates to rising prices at the grocery store.
If you’re feeling like it’s all a bit too much, particularly as we approach the Holiday season, you’re not alone.
And it’s no wonder budgeting has become increasingly important as the cost of living continues to rise.
When it comes to budgeting, there are a few key strategies you can use to help you manage your money and make sure you’re saving enough for a comfortable life now and in the future.
At Wealth Architects, we assist our clients with budgeting and scrutinising their expenses, in line with their long-term financial and life goals.
By understanding the current cashflow position of our client, and keeping an eye on their future, we can help them put together budgets that are attainable and help them take incremental steps towards their goals.
In this article, we look at the rising cost of living and the role that budgeting and scrutinising expenses can have.
The rising cost of living in Australia and how budgeting can help
The cost of living in Australia has been on the rise in recent years, leaving many struggling to make ends meet.
Rising interest rates are trying to combat inflation, but with wage growth struggling to keep up, many feel like their bills are beginning to spiral out of control.
Fortunately, there are a few steps that you can take to help ease the financial burden. One of the most effective is to create a budget.
By taking a close look at your income and expenses, you can make small changes that can save you a significant amount of money over time. For example, you might choose to cook at home more often instead of eating out or take public transportation instead of driving.
Remember, even small changes can add up over time, so don’t be afraid to get creative with your budgeting. With a little effort, you can make a big difference in your cost of living.
How to create a budget that works for you
Budgeting is a key component of financial success. By taking the time to map out your income and expenses, you can get a clear picture of your spending habits and make adjustments as needed. There are a few different approaches to budgeting, so it’s important to find one that works for you.
The envelope method, for instance, involves dividing your income into categories and placing the cash for each category into a separate envelope. This helps you to stay mindful of your spending and avoid overspending in any one area.
At Wealth Architects we like to use the categories of fixed expenses (e.g. rent and other direct debits), discretionary items (e.g. groceries, take away, gifts) and one-off expenses (e.g. holidays, appliances, home refurbishment).
Another popular approach is the 50/30/20 rule, which allocates 50% of your income to essentials, 30% to wants, and 20% to savings and debt repayment. No matter which method you choose, the goal is to create a budget that helps you achieve your financial goals.
Tips for sticking to your budget
It can be difficult to stay on budget, but it’s not impossible. Here are a few tips that can help you stay on track:
- Know your expenses. The first step is to track your spending for a month so you know where your money goes. Once you have an idea of your regular expenses, you can start to build a budget that reflects your spending habits.
- Make a plan. Once you know your expenses, it’s time to start setting some goals. Decide what you want to save for and how much you need to save each month to reach your goal. Having a specific plan will help you stay on track.
- Set up a system. There are a lot of helpful budgeting tools available, both online and offline. Find one that works for you and make sure to use it regularly. This will help you keep track of your progress and ensure that you are sticking to your budget.
- Keep it flexible. Don’t be too rigid with your budget or you’ll find it hard to stick to. Allow yourself some wiggle room for unexpected expenses or occasional indulgences. If you slip up, don’t give up – just get back on track as soon as possible.
- Get support. If you find it difficult to stick to your budget on your own, enlist the help of a friend or family member who can offer support and accountability. Having someone else to help keep you accountable can be a big help when it comes to sticking to your financial goals.
- Set tangible goals. Having tangible goals to work towards, like retirement or saving for your first home makes having a budget much more meaningful
The importance of saving money
When it comes to financial stability, one of the most important things you can do is save money. Many people live paycheck to paycheck, which can make it difficult to cover unexpected costs or save for long-term goals. However, even small amounts of savings can make a big difference.
Having an emergency fund to cover unexpected expenses can help you avoid going into debt, and saving for a down payment on a house or retirement can give you a more secure financial future. While it may not be easy to start saving, it is worth the effort. By setting aside money each month, you can ensure that you have the resources you need when you need them.
So you’ve done a budget. What now?
Once you’ve got a budget worked out, the best way to make use of it is to decide what the savings you are building should be allocated towards. You might want to reduce debt, save up money for a deposit, contribute to your superannuation, invest in shares or combine all of those things in various proportions.
To get the most out of your budget and ensure sustainable progress, it’s important that you seek professional advice and set up some kind of structure so you can follow a plan and keep on top of things.
This means that you’ll be able to regularly track how much you’re spending, against established goals and targets, so that all your hard work won’t just go up in smoke!
How a financial planner can help you set and stick to a budget
Most people know that they should have a budget, but creating and sticking to a budget can be easier said than done. That’s where a financial planner comes in.
A financial planner can help you assess your income and expenses, set realistic financial goals, and create a plan to meet those goals. They can also provide guidance on how to best use your money to improve your overall financial health. And perhaps most importantly, a financial planner can help you stay on track when it comes to following your budget.
They can provide support and motivation when you’re feeling tempted to overspend, and help you troubleshoot any problems that arise. If you’re serious about getting your finances in order, working with a financial planner is a great way to get started.
In conclusion, budgeting is an important tool to have in your financial arsenal. It can help you stay on top of your spending and make the most of your money. If you’re not sure how to create a budget that works for you, or if you need help sticking to it, consider working with a financial planner.
They can help set up a budget that fits your unique needs and give you tips for making the most of it.
Do you need help scrutinising your expenses and budgeting for your future? Let Wealth Architects help you design and build a financial future with you.
Contact us today to learn more.
Everyone at Wealth Architects would like to wish our clients and readers a very Merry Christmas, and a Happy New Year!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Wealth Architects operate from the following locations:
Wealth Architects provide quality trusted financial advice to over 1,500 clients, nationally. Regardless of what stage in life you are at, our qualified and experienced Financial Planners are able to provide you with advice and guidance to help you achieve your goals. We ensure we take the time to listen to you to understand what’s important in your life. Every individual is different, which requires a plan and strategy that is uniquely designed to suit you. This is how the name Wealth Architects was born. With decades of combined experience our approach is holistic, ethical and thorough. We leave no stone unturned in our process and we sweat the small things, so you don’t have to.
Who we help:
A Wealth Architects Adviser can ensure you are extracting sufficient funds from your business into your personal life. This will ensure your hard work is achieving your personal goals – not just your business objectives.
If you are looking for strategies to increase your net wealth, Wealth Architects advisers are experts in accelerating your financial position via proven strategies.
Having a road map before you decide to retire is extremely important. Ensuring your ducks are in a row will put you in the best position to ensure you have sufficient capital when you decide to retire. capital when you decide to retire.
Wealth Architects advisers will ensure your assets are well balanced & structured right for your ongoing income stream.
How we can assist:
Strategy Analysis – Everything we do boils down to giving you the highest probability of achieving the life that you want to live. That’s why we spend a lot of time researching, analysing and preparing financial projections before we put pen to paper.
Cashflow & Budgeting – Cashflow is the lifeblood of any financial plan and we use a very simple structure to maximise your ability to save.
Debt Management – There is good debt and bad debt. We work to accelerate the repayment of bad debt and use good debt where it’s appropriate to increase the probability of achieving your goals.
Tax Planning – Tax is inevitable; however, it can be reduced by effectively structuring your assets and income.
Investment Management – We are unbiased to property, shares or even cash in the bank. All have their place, but what we care about is implementing an investment strategy that you understand, are comfortable with and is aligned with your goals.
Superannuation – It’s generally the most tax effective vehicle to store and accumulate your wealth, and hence it is a fundamental part of our strategy. Choosing the right fund is not just about fees and performance, it’s about understanding your objectives and how much control you would like.
Retirement Planning – Retirement is a significant financial milestone and getting clarity around your retirement goals is just as important as getting the strategy right. In this process we will answer 3 simple questions: How much money do you need? Where will your money come from? How long will this last?
Planning for the Unexpected – Things don’t always go according to plan and when they don’t, it pays to have a safety net. We put a protection strategy in place that you can depend on in the event you, your spouse or your key staff are unable to work due to injury, illness or death.
Estate Planning – It’s important to ensure that your wealth is transferred effectively and in accordance with your wishes, and not anyone else’s. It’s also important that you have someone you trust to make decisions for you if you can’t make them yourself.
Social Security – You have paid tax your whole life, so we work hard to review and maximise your entitlements with Centrelink.
Aged Care Strategies – Planning the move into aged care can be stressful whether it’s for you or your family members. We can minimise this stress by helping you make informed decisions based on sound advice.
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