The road to riches starts with a budget
Investments | 29/05/2017 |
3 min read
New research from ME Bank confirms what we’ve long suspected - tracking your spending has a powerful influence on your ability to save and set money goals.
ME Bank put four participants to the test by asking them to track their spending for an entire month using ASIC’s award-wining TrackMySpend app.
The participants agreed that the exercise empowered their money management in three major ways:
1. It provided a more accurate picture of their monthly expenses, including unexpected emergencies.
2. It allowed them to identify areas or behaviours where they could cut back and save, in some cases up to $600 per month.
3. It increased their confidence in their ability to save, inspiring them to set realistic savings goals.
Being aware of where your money goes, and knowing where and how to cut unnecessary expenses is a fundamental step to setting a realistic budget. Whether you’re saving for a home loan, holiday or car, it enables you to take charge and start realizing your goals.
According to previous ME research, 59% of the 1,500 households surveyed did not record their monthly expenses, and 53% failed to set a weekly or monthly budget in the past six months to December 2016.
In addition to identifying savings, understanding your expenses can be beneficial in other ways. For example, credit applications such as home loans require these details. Or you may want to make informed lifestyle decisions, such as changing to a lower paid job or starting a family.
There are a number of ways you can track your expenses, including apps, excel sheet method or the old-fashioned notebook method.
Whatever you choose, the most important thing is to record your expenses over a period of time so you can identify key patterns. Once you have a better understanding of your spending, and have identified ways to put a little extra aside, you can start to make some long term plans. You might be able to put that money towards a home deposit, a share portfolio, or even contribute a little extra to your super.
Research has shown that salary sacrificing a little extra ever week can makea big difference to your future super annuation balance. But regardless of how you spend or invest your money, knowing where it all goes can help you plan the life you want to live.
Article was originally published by ME.
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