Money Matters
How to Get By on a Small Budget – 3 Steps
By Tammy Sofranic
Following a spike in rental fees, numerous interest rate hikes, growing inflation and a few other factors, it's no wonder many young and old Aussies are looking for ways to spend less and save more. Even though it may sound like a big job, it's doable if you have the proper knowledge. Check out these simple but effective steps to get by with a small budget.
1. Know Your Budget
If I asked you where your money is going, would you have an answer? If not, that may be the cause of your problem. You need to know your budget, aka your monthly expenses and where your money is going.
Start by looking back through your expense history and see where that money is going. Make a few main categories such as rent, food, bills, transportation, subscriptions, health, hobbies, eating out, shopping, sports or whatever else may be a part of your budget.
As you go through the last month of expenses, put each into one of the categories above. At the end of the month, you will see precisely the total sum of each category and will know your most significant expenses, where most of your money is going, and what to pay attention to.
There are also handy apps for money management that offer this kind of service, so you don't have to think or work too hard, such as:
Frollo
The Frollo app is one of the more advanced, free money management tools available to Australians today.
Users can link everything from bank accounts and home loans to superannuation from 100+ financial institutions in-app to get a comprehensive financial overview – all in one place.
Frollo is also one of the first fintech adopters of open banking, which means they can provide near real-time data to customers from participating banks.
Up
Up is a powerful player in the online banking space. Boasting slick savings tools like Round Ups, automatic tracking, and customisable savings accounts at a solid interest rate of 4.35% (T&Cs) with no monthly service fees, Up could be a great place to start.
Not only can you set savings goals, you can pay mates and bills, split your salary automatically using the Pay Day function (so you know your spendable balance), and save up for those dream purchases with Maybuy.
WeMoney
Marketed as a free "social financial wellness" app for tracking and crushing debt, WeMoney empowers users with community tips and modern technology so they can take charge of their finances.
With a suite of features, users can keep track of bills, cancel any sneaky subscriptions eating into their budget, and compare personalised deals on debt consolidation loans.
WeMoney claims the average member can improve their credit score by 63 points just nine months after signing up for their service. Pretty impressive!
Source: https://mozo.com.au/fintech/the-seven-budget-and-savings-apps-every-aussie-needs
Getting one of these apps and looking into your budget is the most critical first step in the right direction. You can't change or improve much without the knowledge or awareness about your budget. Now that you have all these tips and tricks, you're ready for the next step.
2. Save More
Have a good, hard look at your budget. Do you see any room for cuts? For example, you might have thought that you don't spend more than $200 on shopping each month, but the expenses list shows that you often go over $400. Costs can easily sneak up. Also, are those $20+ brekkies necessary, or can you fry eggs home for less than a dollar?
Try to scrap whatever feels least necessary and is easy to replace.
Then, make a plan about how much you estimate you can save. Is it 20% of your income, for example? Calculate that amount and check at the end of every month to ensure you set that money aside, ideally, in your separate savings account.
3. Earn More
If you cut back, plan spending well, and the money is still tight, consider an extra income. Your income will depend heavily on your experience, qualifications, skill set, and time available for commitment.
For example, if you're at uni or high school, you can only work so many hours in the week, limiting the amount of time you make. However, don't let this discourage you.
A part-time or casual job still brings in cash and can help you manage that budget better. Not only is a side job good for additional money, but you also get a reference for your next job and potentially new friends; it's a win-win!
If you follow through with these steps, you will be financially better. You will have more awareness and clarity around your budget and be better set for whatever the future brings, possibly benefiting your career in the long run.
Financial education is something you carry with you and is an essential life skill. Knowing how to manage your money can make a significant difference in your present and future, so putting in some time to learn and apply the knowledge is worthwhile.
