Why you need a budget to get ahead
Do you know where your money goes each week, each month, each year? Like, do you really, really know?
I have to confess that I didn’t. I knew I was paying off my mortgage at a faster rate than I needed to, but I wasn’t sure if I was on track to pay it off within the time frame I wanted.
And I didn’t know how much I was spending on food or fuel or … frivolities.
So I got a budget. It’s a bit scary, because nailing it all down to the tiniest number means you’re being accountable for your spending. But it’s also exciting, because it means you’re creating a plan to achieve your financial goals.
I used Money Simple, which lets you customise your spending categories. You can also save your results online or export it to a spreadsheet.
I broke down my spending into a couple of categories: Hard living costs (power, phone, internet); soft living costs (food, fuel, fun); mortgage payment; extra money I want to put towards my mortgage; saving for a yearly ski trip; and an emergency fund.
Doing it this way, I can see that if I stick to a certain range of spending on my ‘soft’ living costs each week, I’ll be able to hit my target of paying X amount extra off my mortgage and paying it off fully within a (much) shorter time frame.
I’m all about the budgeting now, because what gets measured, gets managed (and minimised).
By seeing how much I really have been spending, I can confidently make projections for the future, and know that if I keep my spending within certain boundaries, there’s no way I can fail to achieve my financial goals.
Go forth and conquer!
Francis is Credit Simple's resident content writer and social media guru. He's passionate about saving money, so we pay him 5 cents to go out and fetch the team coffees every morning. Thanks Frankie.All stories by: Francis Church