Much has been made of federal budget’s tax relief measures. But don’t wait around for them like a chump. They could be pocket-change compared to what you could save from getting your own house in order.
Depending on who wins the next election, you could have up to $530 (Coalition) or $928 (Labor) extra spending money in your pocket each year, thanks to proposed changes to the low-income tax offset.
But instead of waiting around for the federal budget tax cuts to come to you, create a personal budget of your own.
Not only will you get to reap the benefits straight away, but the rewards will be much more than $10 to $20 a week.
Here’s how to create your own personal budget in four extremely simple steps using ASIC’s MoneySmart budget planner.
Step 1: Calculate your income
This is the easiest step. Have a look at your pay slips or bank statements to see how much is going into your account on an average month. Make sure you include any rent you might be earning, or interest on savings. Don’t include the income that never makes it into your bank account, like PAYG and super.
Step 2: Work out your expenses
This is slightly more complicated, as expenses change month to month. To work this out, check your bank statements, bills and receipts to see how much you’re spending on things like rent, groceries, transport, medical expenses, utilities and clothing. Remember to include payments you only make once or twice a year, like car registration or insurance, and average them out.
Step 3: Crunch the figures
Once you’ve entered your income and expenses the next part is simple. The calculator will crunch the figures and help you work out how much you have left over to put towards your savings. You should be aiming for about 20% each month. Now, that’s a hard target to hit at first. So perhaps try starting at 10% and then finding an additional 1% in savings each month thereafter. In no time you’ll hit that magic 20% figure.
Step 4: Track your progress
Each month take stock of where you’re at by reviewing your bank accounts and seeing where you could make further cuts – or perhaps where you had a little slip up.
Also, set achievable short, medium and long-term goals to ensure you stay on track.
The average Australian wage is $84,000 before tax, according to the Australian Bureau of Statistics.
If you’re taking home $5,500 of that after tax each month, then by saving 20% of that you’ll be stashing away more than $1100 each month.
That’s 14 to 25 times more than either Labor or the Coalition can promise you.
Now, sure, creating a budget sounds easy on paper, but everyone has their own unique situation and yours might require extra help.
If you feel as though you need assistance in setting up a budget, come in, have a chat and we’ll help create a budget that suits your specific needs and lifestyle.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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