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Budgeting 101: How to Start Saving Like a Pro

Budgeting 101: How to Start Saving Like a Pro

Kicking-off your saving journey

Talking about finances, money, debt and income can be incredibly confronting and even taboo. It’s one of those topics that people tend to tip-toe around and not bring up in polite conversation. This can lead to people being afraid to speak up when their finances get out of hand. But it doesn’t need to be like this. We know that when it comes to saving, budgeting is probably one of the most intimidating things we think about when we’re trying to organise our finances. Not only because it seems to be difficult, but it can be pretty confronting when we figure out where all our money is going!

This has to change! Budgeting can actually be one of the best things you can do for yourself and your finances. Rather than being in a constant state of denial let’s instead get educated and get on top of our finances. There’s nothing quite like knowing you’re in control of your money and you know exactly where it’s going. With a little help and some quality resources, getting your finances back on track can be freeing – not terrifying! Want to know how? Oiyo has you covered.

What is budgeting?

In a nutshell, budgeting is the process of creating a plan for your expenses, income and how you plan to spend your money. It’s a great way to keep track of your money, pinpoint any unhealthy spending habits and reach your savings goals. Basically, it’s balancing your income and expenses. It helps you stay in control of your money by giving you a clear picture of your finances – what’s going in, what’s coming out.

What is the best way to start budgeting?

There are many fantastic ways to go about budgeting successfully to ensure that you meet your money goals. What you choose for yourself will come down to your personal preferences and savings ambitions. There are so many ways to go about it that it can be personalised and tailored to your specific situation and finances. If you are looking for tips more specific to your situation, speak to a professional financial advisor. In the meantime, here are a few ways you can start your budgeting journey:

1. Organise your income and expenses

A great way to start is by sitting down and figuring out what money is coming in versus what’s going out. It’s amazing to see where your money is going when you actually start tracking it. Start by calculating your net income* each week/fortnight. This includes all income from your employer, Centrelink (if you receive benefits), and investments.

Next, take note of what you’re spending your money on. Try to pinpoint unnecessary expenses that you can cut down on or any spending habits that you can change. Getting a clear picture of your expenses is incredibly important to be successful in your budgeting journey.

*net income is the amount you earn after subtracting taxes and any other deductions.

2. Set savings goals

Setting savings goals is extremely important for staying on track with your budget. It’s a fantastic way to motivate yourself to actually put the money aside and keep yourself accountable.

Set yourself a target for how much money you want to have and by what time. Then break down how much you’ll need to save each week/fortnight/month in order to achieve that target. This allows you to see your savings goals broken down into small, easy to manage amounts to make it appear far more attainable and less overwhelming.

You should also consider where you’re storing your money and what bank accounts may help to bolster your savings.

3. Start setting money aside for an emergency fund

Unfortunately, emergencies can happen to anyone at any time. Stashing away money into an emergency savings fund is a great way to protect yourself from these nasty unforeseen events. If you haven’t already done so, shop around for the highest interest savings account to ensure you’re getting the most out of your hard-earned money. Once you have set up an account, it’s recommended you deposit funds as frequently as possible.

Always keep in mind that this account is for emergencies only.

4. Figure out what expenses you can cut or change

One of the best ways to budget effectively is to cut out or change any unhealthy spending habits you may have. While you may think your morning coffee or uber home from Friday night drinks is harmless, expenses like these will start to take a toll on your finances.

We’re not telling you to completely stop buying coffee. After all, if that’s what you love, who are we to tell you to stop. Instead, you can accelerate your savings by switching from a large cup to a small cup. Small changes like this to your daily expenses will have a resounding impact on your finances in the long term.

Why is budgeting so important?

Budgeting is important as it ensures that you will always have enough money for the things that you need. It can help you stay out of financial distress because you’ll be more aware of the income you can spend, and the income you should save.

Having debt is usually the result of your expenses surpassing your income. Sometimes, in the case of an emergency, this is unavoidable. But in your day-to-day life it’s pivotal you stay on top of your finances and harnessing the power of budgeting is an effective way of doing this. By jotting down what money is coming in versus what’s going out and setting savings goals, you can keep your finances looking healthy.

Looking for some budgeting gurus and resources?

From budgeting on single incomes to budgeting as a family, there are some brilliant resources easily accessible to you. So, if you’re looking to get some advice from some of the best then we recommend having a look at the following people, books and podcasts!

The Barefoot Investor by Scott Pape (Book)

The Barefoot Investor is probably one of the better-known books on budgeting and personal finance that has come out in recent years. It’s a brilliant resource that has taken the finance world by storm and helped countless people not only budget their money better but really get ahead with their finances. Pape avoids strict budgeting techniques and doesn’t overwhelm readers with countless ‘tips.’ Instead, he draws out a step by step formula that’s practical and achievable. He even name drops the companies he uses to further his savings and financial well-being.

The Total Money Makeover by Dave Ramsay (Book)

This is a great book that has sold millions of copies worldwide and continues to sell well. Focusing on reducing your debt and increasing your available cash flow, The Total Money Makeover is a must-read for anyone wanting some fantastic advice on all things finance. Rather than preaching money fads and get-rich-quick schemes, this book instead focuses on creating a strong plan to pay off all your debt and start creating that nest egg you’ve always wanted. With some amazing reviews attesting to the fact that the advice is easy to follow and actually works, this is another great resource for you to take a look at.

Penny Pinchin’ Mom (Blog)

If you’re looking for a fantastic blog that is getting constantly updated with great tips, tricks and budgeting secrets, then Penny Pinchin’ Mom is a great place to start. It’s full of fantastic advice to organise your budget and stick to it. What’s great about this blog though are all the little extras that it provides. You’ll have access to cheap recipes, tips to win at tax time, how to score cheap deals/coupons plus much more.

My Millennial Money (Podcast)

My Millennial Money is, as you probably guessed, a podcast for millennials and their money. This podcast is brilliant as it strays away from the traditional ‘old-school’ approach to budgeting and instead sheds new light on the world of personal finance, money stress, travelling on a budget and much more. Hosts Glen James and John Pidgeon discuss money in a light-hearted way. They even go as far as to describe themselves as ‘Hamish and Andy for your finances.’ With a variety of topical guests, this podcast is a game-changer and a great listen.

She’s on the Money (Podcast)

She’s on the Money is a brilliant Australian female-focused podcast that covers everything from Afterpay and HECS to budgeting and investing. Host Victoria Devine is an award-winning financial advisor that is passionate about empowering women to make smart decisions with their money. You’re bound to get great advice and foolproof tips to get well on your way to sorting out that budget.

Speak to a financial counsellors/advisor

If you’re trying to save for a big expense such as a new car, a trip overseas or perhaps even a home deposit, budgeting your money is going to be the best thing you can do for yourself. However, if you’re having trouble saving or you don’t really know where to start, you can always seek the services of a financial counsellor. Many people need a bit of help when it comes to their finances and that’s where a financial counsellor comes into play.

Financial counsellors are qualified professionals who have made a career out of providing solid financial information. They give advice to the everyday Aussie to help them get on top of their finances.

Financial counsellors are fantastic as they will basically do all the hard work of budgeting for you and will figure out exactly where your money is going. They’ll help you create a financial action plan and put it into place so that you can finally get your finances back on track. Of course, you will still need you. You will need to stay consistent with your spending cuts. If you don’t, your financial counsellor will most likely hold you accountable. They’re dedicated to helping people reduce debt and grow their savings.

Why budgeting doesn’t have to be scary

We know that the idea of budgeting can be intimidating. Finally sitting down and actually seeing where your money is going can be pretty confronting for many people. But, we’re here to tell you that it doesn’t have to be scary at all. In fact, it can be incredibly freeing when you organise your budget and see your savings grow and your debt decline.

With so many amazing resources at your disposal, there’s never been a better time to get on top of your finances. These include incredibly educational books and brilliant podcasts and blogs, all from people who have done it themselves. And if that just seems like it may be a bit much for you, no worries at all. That’s where the services of a financial counsellor are perfect for your needs. They do all the hard work for you and give you the benefit of their years of experience and education.

Whether you’re just starting your budgeting journey or you’re looking for new ways to save some extra money and reach your money goals, the key is to be patient. Stay consistent with your budgeting and you will start to see results.