Having a financial goal, whether it’s saving up for a home loan deposit or building up a rainy day fund, requires financial discipline. You have to set boundaries and do everything you can to make sure you’re putting away the right amount of your income toward your goal.
The traditional, and arguably most effective, way to do this is to draw up a budget. A budget will outline where your money will go for a particular period of time, whether a week or a month, before you get around to spending it. By planning your expenses and organising them, you will get a better idea of how you can save even more, and which areas you can cut down on.
Here is a budget template that will help you on your way:
- List your expenses
The first step is to make a list of your weekly and monthly expenses. This means everything, from your daily coffee, to your bills and rent.
You’ll want to note down everything and group it under categories like:
Now you know exactly where your pay is going, as well as where you can reduce your spending. If you’re shelling out a lot on bills, it may be time to cut back on your energy usage. Or if leisure and entertainment make up a significant part of your spending, then a lifestyle change may be necessary.
- Work out how much you need to save
Work out the cost of the particular goal you’re saving for. You may not be able to work with an exact sum for every goal, but this will give you an idea of what you should be aiming for.
Next thing, use a savings account calculator and see how quickly your savings will grow. This will help you set your goals on how much you need to save each month.
- Find out where your priorities lie
Once you know where your money goes, it’s time to work out what your biggest priorities are. There is a big difference between wants and needs. Obviously, bills, including insurance payments, are mandatory. Same with rent and, to some extent, transportation. The amount you’re moving into your savings should be also be off limits.
Everything after this, including food, is discretionary spending. You can always save more by eating out less or skipping the weekly after work drinks from time to time.
- Track your spending
Tracking your spending with a budget planner will help you understand where your money is going and keep you focused on your goals. A simple budget template will get you started, or you could use the “Pocketbook” app, which lets you record your expenses on the go.
- Start an automatic savings plan
You’ve organised your spending and you know exactly where your money is going and how much you’re meant to be saving.
But making a budget and actually having the discipline to stick to it are two different things. In order to help ensure you aren’t tempted to spend the money that should be going into your savings, start an automatic savings plan, so a sum of money is transferred from your into your savings account without you having to do a thing.