A budget is critical to understanding where your money is going each month to help you live a stress-free life and setting yourself up financially in the long-term. Budgeting properly will ensure that you pay down debt on time, can save for significant one-off expenses, and help you understand exactly how much you have left over each month for ‘fun’ expenses!
Here, our MoneyShop experts cover our top five simple budgeting tips to help you stay on top of your budget in 2024.
1. Keep track of your spending
After setting a budget, tracking your spending is helpful to see what your wants and needs are. Consider keeping records in a spreadsheet, spending diary, online tool, or smartphone app. You may notice that your priorities and expenses change over time, so update your budget to reflect this.
When you’re planning your expenses, make sure you account for food, accommodation, transportation, water bill and power bills first. Once these necessities are taken care of, you can fill in the remaining categories in your budget.
Keep in mind that your spending will differ month on month. For example, you may have to budget for back-to-school supplies or car maintenance. Other times you may be saving for a wedding or the festive season. If you work these expenses into your budget in advance, you’re less likely to end up with any nasty surprises!
All budgeting starts with understanding your monthly income after tax. This is called your “take-home pay”. Keeping track of exactly how much money shows up in your account each payday creates the foundation for setting your spending and savings goals. You can calculate your total monthly income using online tools such as this PAYE Calculator.
2. Avoid budget burnout
You may find that checking in on your budget and crunching the numbers is becoming so tedious that you can no longer be bothered!
Don’t be too hard on yourself. Budget for some cheat days; consider a quarterly shopping spree or a wishlist item every month that you meet your savings goals. Also, you don’t need to check in on your accounts and recalculate your average weekly savings every other day; just set aside 30 minutes each week to log your expenses and make sure you’re on track.
One significant benefit of a lump sum loan is that it prevents you from overspending. You can only spend up to the allocated one-off amount. You pay off personal loans in fixed, small, weekly or monthly repayments over a longer period of time. Loans provide peace of mind that you are spending within your limits, and not building up unforeseen debts from impulse buys.
By contrast, once you get a credit card approved, the funds can be drawn at any time, providing immediate, flexible access to credit. This makes credit cards useful for people who have irregular income patterns, or want a back-up for unexpected expenses.
3. Maintain a separate savings account
A separate account from your daily spending account will make it much easier to measure your budgeting success. Most online banking and banking apps allow you to set up an automatic transfer. Set yours to transfer your savings goal into your account the day after you get paid. Additionally, separate accounts for each of your savings targets can be helpful, so you can easily track your progress without any confusion.
4. Think of long and short-term goals
Planning your short-term spending, but setting long-term goals decades away, like retirement, is quite another. It’s never too early to put some plans in place. Putting away money for the future may not feel like much now, but you will appreciate it in the future. We also recommend making regular contributions to your KiwiSaver account, which you can only access for retirement or your first home deposit.
5. Create a buffer in your budget
Life is full of surprises. For example, your car may have broken down, you may have received a fine, or an unexpected medical expense needs to be paid. MoneyShop recommends setting aside a small amount for unforeseen costs each month. In your budget plan, you can label this ‘miscellaneous spending’. That way, when something comes up, you can cover it without falling short elsewhere in your budget.
Moneyshop can help with your unexpected expenses
Our good, honest, and fast loans are here to help you, no matter what life brings! Whether you’re looking for an unsecured loan or car loan, debt consolidation loan, or something to help you finance a special event, we can help you make sure our small weekly repayments can fit into your budgeting plans.
Thinking of getting a personal loan?
If you want to apply for a loan, we make the process as easy and stress-free as possible! With competitive rates, streamlined online service, and helpful loan information, the MoneyShop team are known as New Zealand’s most trustworthy loan providers. Contact our friendly team if you want to talk about small or large fast loan options.
