29 Jan It all starts with CASH
When you hear the term ‘cash management’ and ‘budgeting’ you probably start thinking about spreadsheets, bank accounts and wondering where your money goes every month. For some, it may even make your blood pressure rise a little but if you take a step back, it’s really just working out what money comes in and what goes out. Simple right? Not really considering the average person probably has several accounts, a credit card, mortgages and more.
Here’s a few ways some people manage their money:
1. Use a separate spending account. Have one account for all your regular monthly bills and when your salary comes in, make sure you transfer funds into this account to cover these expenses. You may want to throw in some money for your quarterly and annual bills as well. This way the money you have leftover you can either allocate as ‘fun’ money or put towards saving for something BIG. At least this way all the essentials are taken care of and you can actively monitor the balance between being happy now or saving for a rainy day.
2. Track as you go. Keep a spreadsheet of all your income and expenses and update it regularly. As crazy as this may seem in this day in age but the majority of people STILL use a spreadsheet to track their budget. I guess it’s a step up from writing it in a notebook.
3. Use an app. Your bank probably has some sort of app that can help you track your expenses, the problem with this though is we don’t always have all our accounts with the same institution like home loans, car loans, credit card etc. One solution is to use a platform such as MyProsperity (see here for how we do it), which not only allows you to have a consolidated view of ALL your accounts but you can also track the value of your home, shares and superannuation, providing you with a complete view of your financial world. It also automates your budgeting based on your past transactions so you can set and track goals in real-time.
4. Try the envelope method. This is an oldie but a goodie for some people. How it works is every month you take out cash and store it away in a separate envelope for different purposes like rent or groceries allowance. You can probably do the same digitally these days but opening multiple accounts at a bank. Be aware that some banks may charge you a monthly account keeping fee. This method will help you keep a lid on your discretionary spending.
5. Download after the fact. If you’re not too concerned about where you spend your money but just want to ensure you know where it’s going then try this method. It’s as simple as downloading your transactions and then putting it into a spreadsheet and then sorting line by line.
There’s not really a right or wrong method of tracking your expenses so try some of these and see what works for you, and if you’re still in doubt why don’t you come to our monthly Lunch & Learn session where our team can help you ‘Declutter your Finances”, click here to RSVP – limited spots available!
If you would like to know more, talk to Michael Sik at FinPeak Advisers on 0404 446 766 or 02 8003 6865.
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