Our 5 Step Guide To Sorting Out Your Money In 2018
So your money is kinda-sorta a mess. Well, there’s nothing like a new year to herald a fresh start, right? And 2018 is as good a time as any to get control of your finances, and get, well, richer as a result.
You’ve probably been putting off doing this for ages, telling yourself it’s “too hard” or time consuming. So we’ve broken it down into steps that take under an hour each.
Day 1, Step 1: Assess the damage
Think of yourself like a doctor from one of those TV shows where they’re always having to diagnose some obscure disease: you have to look at the symptoms, make a diagnosis, then treat it.
So let’s make a diagnosis – get out your bank statement for the past month, and go through each item, line by line. It’s important to know where your money is going. You might not think you’re spending much on clothes, but those $20 impulse purchases add up. Or perhaps you tend to let go of your self control after a few Friday night drinks – and then you find yourself shouting rounds, getting pricey take away for dinner and Ubers home.
Read through your statement, and decide what you’re spending too much on.
Day 2, Step 2: Dream big, kid
This one is a fun one. Get a pen and some paper and have a think about your money goals. A lot of the milestones in life – like round-the-world holidays and your first house – cost money. Write down what you’d like to do with your money: these are your goals, and they’re what you need to remember when you’re tempted by those shiny things you identified on Day 1.
Day 3, Step 3: Do some division
Not the sort of division you did in high school maths – we’re talking about dividing your cash into categories. There are a whole bunch of ways to do this, so we’re going to tell you about the 50/20/30 rule and you can adjust it according to your circumstances.
The 50/20/30 budget suggest you put 50% of your income into fixed costs – things like rent, bills, etc. 20% goes to your future money goals, aka your savings. And 30% is to be spent on flexible costs – which includes groceries, but also things like fun nights out (and whatever you identified as your money pitfalls in step 1).
Apply these figures to your next pay packet, and see how it is living between those lines. Well done: you just made a budget.
Step 4: Check in on payday
The key to managing your money is making it a part of your life. So, on payday, when you’re feeling rich and you get tempted to run out and spend it all in one glorious moment – don’t. Instead, sit down and reassess your spending since your last payday. Did you stick to your budget? Are you closer to your money goals? Did you give into temptation a bit too often?
Then look at the month ahead. Make sure you’re mindful of things like annual costs for car rego, or big events like weddings; budget for them and you’ll be better off at the end of the month.
Step 5: Allow yourself some treats
Living within your means shouldn’t mean sacrifice or boredom. You’ve done well, so it’s wise to reward yourself once in awhile. The only difference is, now you’re rewarding yourself without blowing out your whole budget.