How to get Your Budget Sorted
If you don’t have one, take the time to create a budget today. It doesn’t need to be long or complex, you need to know what’s happening with your money though.
A budget is simply telling your money where it is going instead of having your money come in and frantically trying to get it all sorted then wondering where all your money went. Once you have it sorted and your money is working for you, your stress levels will go right down.
I wrote about how to create and stick to a budget here. Check that out as well as reading below. I’m going to tackle some common issues in this post as well as tips for creating a budget that works for you.
“I can’t budget, I have no money!”
Most articles about budgeting discuss working out your expenses, splitting your pay into different accounts as your money comes in so you can pay for bills as they come up. What happens if your income is variable or you are so far behind on bills they are going to cut off the electricity? The variable income I’ll address further down, right now, I want to help you get on top of things if you are in a situation where you are behind.
1.) Be aware
The bills aren’t going away by themselves. Get all of them out, find out how much you owe on each one, when they are or were due, write down if you have a payment plan set up or asked for an extension to pay as well.
2.) Call to negotiate payment terms
Call each provider and ask for an extension or ask if you can do a payment plan. If you go on a payment plan, do not agree to an amount until you have worked out how much you can afford to pay. When you are speaking with them, also make sure any discounts you might be eligible for such as a pension discount, have been applied and ask if they have a pay on time discount so you can aim for that in the future. If you are struggling with debt collectors, this post will help.
Now you know when bills need to be paid, how much they are and which ones will give you an extension, put them in order of priority with the one due first being the first bill you focus on. Do not miss payments on any of the other bills, but do put extra money on the first bill where possible. Write the bills and their payments on a calendar and have it somewhere you can see it so you know where you are at all the time and can focus on getting it paid asap.
4.) Work out how to pay them
If you are behind on your bills, it probably means you aren’t earning enough, they were really big or you had an unexpected emergency. It happens and the main thing is you focus on what you can do from now on to put you in a better financial position.
If you don’t have enough money coming in, work out ways to get more money, even if it’s only short term to help you get back on your feet. Find 43 ways to make money as a single mum here, 51 ways to make money from home here or 16 ways to make money on the side here. Also, check out my monthly side hustle updates here.
Next, pay that extra money on the bills. Don’t be tempted to spend it. You need to get your bills back on track and cleared before the next lot come in.
Another option is to talk to charities and see if you are eligible for assistance such as having your electricity bill paid, having someone negotiate your bills on your behalf or any other assistance to enable you to save money elsewhere and put that money on your bills. You can also use this list to find lots of freebies in Australia.
5.) Plan for incoming bills
Bills are guaranteed to come again. Get to know exactly what bills you have and start planning for when they come in next. If you can get your budget sorted and set up a bills account to put money in so when the bills arrive you can pay it, you will feel a lot better. If you can pay on time, some places give you up to 30% discount on usage so it pays to be on top of it.
6.) Get other help
If you are struggling to pay bills, you are classed as being under financial stress. Check out this post to get more information on what to do and where to get help.
I Can’t Budget, I Have a Variable Income!”
So have I, for years! So do most business owners, casual, contract and part-time workers. Variable income is not uncommon, it can be difficult to adjust to it. If you have an idea of what the lowest you will get is, that is where you start and what you plan your budget around.
With a variable income, you need to set up an emergency fund and buffer asap to get you through leaner months and build it back up again when income is plentiful. Also, work on living on the previous months’ income instead of living waiting for the next lot of pay. By living and spending what you have already made, it will be easier to manage in the coming months.
“I Have Just had a Bunch of Emergencies Which Wiped my Savings!”
I’d be surprised if anyone got through life without emergencies. They happen, the important thing to remember is you can get back on track and to focus on the future. If an emergency has put you in debt and thrown out the budget, work on getting back on track as soon as possible. Cut all unnecessary spending and look for ways to make more money to help you build an emergency fund again then clear the debt. Check out the fast money challenge and see how much you can get in 5 days.
“I Don’t Know how Much I Spend!”
Start tracking your spending. Everyone should do this anyway. Write down everything you spend money on and get to see you spending patterns. Take note of things like how you feel as sometimes we might be emotional spenders without realising it. What are you spending on that doesn’t fit in your budget? Do a complete overhaul such as my annual financial review. Or read up on how to cut back on everything here.
Basic Budgeting Tips Everyone Should Know
A budget can be as simple as writing down all your expenses and income, making sure you are spending less than you earn and setting up accounts to transfer money to when you get paid. Accounts such as bills, savings and every day. My preference is to use ING for different accounts like this. They have a $100 sign up bonus too if you use the code CNW116 here.
Live Below Your Means and Take Baby Steps
Spending more than you earn is going to end badly. Learn to live on less than you earn. Start with saving an emergency fund of $2,000 to $5,000 to cover you. Next focus on clearing your debt as fast as possible. Check out how these readers paid off $90,000 in a year (they started off unemployed), plus tips to clear debt here. Next, build up a larger emergency fund and save for a house or pay a chunk off your mortgage.
Those are the starter steps. Once you have savings, no debt and are sticking to a budget, you need to think about retirement planning and what sort of lifestyle you want now as well as the future, then do what you need to make that happen. You might want to travel, invest in shares, buy rental properties or be able to collect wine. Whatever it is you want, make a plan and get it happening.
Review Your Budget
A budget can be set and forget in many ways, but what happens if you have a pay rise, change jobs, one of you stops working or you want to renovate? A budget should be reviewed regularly to ensure it still fits your needs. Check out how my annual review has saved me thousands every year.
What budgeting tips do you have? How do you budget?