Budgeting Rule #1 – Always start with your outgoings and not your incomings… It always fascinates me that this is the one, biggest mistake that people make when they are trying to organise themselves a fabulous household budget (or call it what you will).
So what are you spending?
We are all conditioned to “spend what we earn”. The person that earns $350,000 per annum SPENDS $350,000 per annum, much the same as the person that earns purely benefits of say $550 per fortnight, spends $550 per fortnight.
Now then! You might think that the person earning $550 per fortnight can only spend $550 per fortnight and nothing more because they have no more. But they CAN save some and it soon mounts up! There is an old saying that goes “You can go broke on a high income, and you can get rich on a low income”. We only have to watch the news on the TV or look at Social Media to see how the top earners blow all of their money – often in spectacular fashion!
At Spending Made Easy, we have an array of clients, from all walks of life, with all sorts of occupations. We do actually have a client who literally gets only benefits. Yet, they are the one who is saving the most! True story. We also have clients earning in excess of $200k-$300k per annum with NO savings. NO Super. NO mortgage. NOTHING to show for all that money! So where does it all go?
We know what we are bringing in...
But we seem to just spend it all...
Yes, we may save some along the way (if there is any leftover before the next pay cycle – am I right?), but in general, we will account for, and thus accommodate whatever we are bringing in – WRONG!!!!
What To Do
When creating your budget, or your Excel spreadsheet, or your Income and Expenses chart, whatever you like to call it - you should ALWAYS start with your outgoings. The stuff that you are committing to on a daily basis. Start with your “Needs” and then go on to your “Wants”… (check out my other blog).
Roof over your head
clean running water
food on the table, you know the drill.
Then move on to the rest. People NEVER (ever) reach the actual amount that they are bringing in. There is generally always a surplus when they only consider their needs!
Do you think that the Guy earning $200,000+ per annum (yes, he is a real client too) EVER got to $200K+ expenses per annum? No way Jose! Far from it. And yet he still had no money left over before his next pay – and this guy did not have any savings either!
Baby steps! Start by making a shortlist of all of your most important expenses and then go from there. Then list all the rest of your expenses, prioritize them and then add them into your budget – one by one - in order of priority! People spend a lot of time and effort dividing things up to accommodate their pay cycle when they are paying some bills quarterly or annually, weekly or monthly (don’t forget the daily coffee). It all gets very complicated and stressful – and often unmanageable (and thus ends up in the “too hard basket”).
Budgets are a thing of the past. Spending Plans are in.
With a Spending Plan, you never need a calculator, it knows when your next bill is due and it knows how much money you need to have in your bank account, at any one time, to live the lifestyle you have set up for yourself. One of the best things too – is that it can predict 10 years into the future! Imagine that if you were saving for a house, or a fabulous holiday – or even a child’s 18th or 21st, Wedding even!
We Can Help
If you want a Spending Plan that can help you, then please contact us to find out more. We will create a personalised, detailed Spending Plan, just for you!
You won’t regret it! You can book in here for a no-obligation chat.
For more information, check out www.spendingmadeeasy.com.au The testimonials speak for themselves…