Buying your dream home is one of the biggest and most exciting purchases you are ever likely to make. As house prices continue to grow, saving the necessary deposit is becoming harder and harder. You’d be surprised what a little Spring Clean can do to your savings over time.
Budgeting sucks, but neglecting to understand your outgoings will leave you further from your achieving your goals. When preparing your budget, it is important to consider your current financial situation by working out your priorities – how much you need for basic living expenses and if there is any little things that you can go without.
- Begin your budget by listing all sources of regular income. There are plenty of online resources and templates that you can use to start. Include everything from employment income, dividend income, interest earned on savings and potentially family hand outs from that loving Grandma!
- Collect your bank statements, bills, accounts and other regular expense records to give you an indication of how much you spend each month. Be realistic with yourself. There is nothing to gain by putting your head in the sand.
- List your outgoings (with large items first) by breaking them down into two sections: fixed and variable. Fixed expenses don’t change from month to month and include things like: car loans, rent, personal loans repayments etc. Variable expenses change regularly and include groceries, utility bills, eating out and entertainment. Don’t forget to add once off annual items like car rego, health insurance and annual memberships.
- When reviewing your categorised expenses, assess if you can make any reduction to the non-essential items in the variable spending before addressing your fixed and more essential items.
- Compare your expenses against your income to and work out where adjustments can be made. If you find that you are not left with as much as you wish, even the smallest changes can make a difference. Do you really need to buy 2 coffees a day? Cutting out that alone could save you $2,500 a year.
- Give yourself a realistic timeline and encourage yourself to stick to your budget. If you have an exciting goal to achieve, the sacrifices are more than worth it.
If you feel it is all too hard, just remember that saving something is better than saving nothing!