Our Insights...

 If you find that you're living pay cheque to pay cheque and just barely getting by (or not even), then it's time to make changes. 

The following tips can help you take back control over your spending and saving habits. 

Knowledge is Power 

Many say they simply "don't know where the money goes" - that's the problem there. Take the time to fully understand your expenses, and seek advice from a financial professional who can build you an accurate picture of your position.

This knowledge unlocks the ability to control your funds, and gives you the base for a stronger financial position.

How Much Do You Earn And Spend? 

Work closely with your financial adviser to crunch the numbers. Scour through bank statements, pay slips, tax returns to get an idea of what's coming in. If you have a business or are self-employed with fluctuating income, get an estimate by averaging the last 6-12 months of earnings. Or take your lowest-grossing month as a safe baseline. 

Subtract what you have saved up in the course of a year from the earnings figure of the past year. That's one way to get an idea of how much you actually spent. 

What are you spending on? Take a month to collect receipts, bill statements and any other expense record to find out. Track every bit of expense data you can find. Look for patterns. How much of your income goes to necessities like electricity and groceries? How much goes to eating out and buying designer clothing? 

If you notice that what you're spending in a month tends to be more than what you take home in a month, then you have a problem. Especially if you have spent more on wants than on needs. 

Here's where budgeting is your new best friend. 

Design (And Stick To) A Budget 

Budgeting is a financially healthy practice that most responsible adults should know how to do, but many don't! Your budget can work for you in two ways: help you reduce debt and help you save. 

There are a number of ways to design a budget, and your adviser will help you build a plan to suit your personal needs. A basic example:

Calculate the total cost of your necessary monthly expenses. Add in an allotment for savings (more on that later). Then decide how much you can afford to spend on luxuries like eating out and entertainment and holidays. 

Sticking to a budget is the key to success in managing your money. But it's important to be realistic and flexible. Changes in your income or the economy may require that you make some adjustments to your budget as you go along. 

Make Cutbacks 

To help you reach your budgeting goals, take an honest look at your needs and wants. See if there are any areas you can either cut out or at least cut back. For example, how much would you save if you didn't buy that $4 cup of coffee twice a day? What seems to be a trivial expense adds up quickly if it's part of a regular habit. 

Can you swap out any name brand products for cheaper versions? Switch to energy-saving appliances? Set a monthly limit on how many times you go out shopping with the girls? Beers with the guys? Saving in all these little areas will be doing yourself a big favour down the road. 

Schedule Your Savings  

It's natural to save what's leftover, but you shouldn't rely on this method. If you only squirrel away what's remaining at the end of the month, you may be disappointed by how slowly your account grows. 

Instead, make your monthly savings deposit a part of your budget. Set aside that scheduled sum right from the get-go. This way, you won't be tempted to spend a little extra here and there on unnecessary items. Stay committed to your savings and it won't let you down when you need it. 

Get Help 

Successfully staying on top of your cash flow is possible! As long as you are aware of your circumstances and stay disciplined, you'll soon see a difference.  

But this can be tricky to figure out if you don't know where to start.  

There are tons of budgeting tools (free ones, at that) available online. But for more personalised assistance and advice tailored to your needs and goals, you'd do well to consult a professional financial adviser.  

For a no obligations discussion about your needs, contact the Calder Wealth Management team now. Give us a call on 08 8373 3333.

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.