We’ve all got that friend. You know the one: the one who’s already purchased their first home and is in the market for their second, makes extra super contributions (“it’s part of our 20-year plan”), and asks you how your shares are doing. Do you mean share plates?
They’re a touch irritating, sure, but you can’t help but ask for a budget breakdown so you can follow in their financially savvy footsteps.
You create your ‘buckets’, set strict spending limits, and download all the apps. To no avail.
Why isn’t it working?
We’ve all got that friend. You know the one who has a similar income to you, but they’ve already purchased their first home and is in the market for their second, makes extra super contributions, and asks you how your shares are doing.
It’s a touch irritating. And it’s also hard not to ask for their budget breakdown so you can implement, but research tells us that everyone is different. We’re here to help you unlock the right budget strategy for you.
Budgeting is not a one-size-fits-all fit.
As each of our spending habits, triggers and mindsets are very different, and very layered. What works for your friend might not work for you.
There are so many different budgeting strategies out there, and there’s more to it than numbers in a spreadsheet or app.
In this guide we’ll cover the five foundations you need to create a rock-solid budget all your own.
- The numbers
- The values
- The behaviors
- The tidy ups
1. The numbers
How do you save properly if you don’t know what’s coming in and what’s going out?
Get out a spreadsheet, app or good old paper and pen, and make a list of all your current fixed expenses. Things like rent, bills, insurances, and your Netflix, Spotify, and Audible subscriptions.
Then, best-guess your way through the rest. Things like food, fuel, your daily coffee habit, and weekly night out.
Make sure you go through your most recent bank statement to ensure you haven’t missed anything, and please – don’t leave anything out, big or small. Any budget you make will fail if you don’t have a crystal-clear picture of your expenses.
2. The values
There, maths homework done. Now, let’s dig a little deeper…
What does money really mean to you? What do you really value in life? Is it great shoes, jewellery, the newest electronic? Story-worthy experiences, like front-row tickets to see your favourite band? Or is it quality time with your family and friends?
This is the part of the savings plan where we sit down with ourselves and ask the big questions.
There are no wrong answers. The problem only arises when what we value is quality time with the fam on our annual holiday, but we’ve spent all our money on Nikes this year and can’t afford to go.
That’s why taking the time to get really honest and really clear about our values is crucial. It means the next time you’re in Apple holding the latest iPhone in your hot little hand, you’ll stop and ask yourself: do I really want this? Or do I want to keep my perfectly good phone a little longer and put that money towards my holiday? Or new home deposit?
3. The goals
We’ve done the maths and dug up our core values, now it’s time to line that newfound knowledge up with a goal.
Your goal might be saving your first $1,000, saving your next $5,000, or something juicier like paying off a credit card, booking a holiday, buying a new car or putting down a deposit on a home.
Like any goal, it’s best not to worry about anyone else and just focus on you, and where you are.
What matters is that it feels aligned with the core values you set in the exercise above, and that it provides the extra motivation you need to keep you aligned with them, too. Having a goal to work towards also helps curb the impulse purchasing and makes you more conscious with your money.
For help finding your goal, or as we like to call it, your ‘why’, read this.
4. The behaviours
Ooft okay, this bit can be tricky. But we’ve got you.
Working out what your spending habits—and their triggers—are, is so, so important to your budget.
Why do we feel the need to buy things we don’t actually need? We all do this, so we promise you you’re not alone.
Are we trying to compete with an oh-so-effortlessly-cool colleague? Are we mindlessly scrolling? Are we just feeling a little bit bleh today?
Work out your triggers so you can work on them. Now would be a great time to read Impulse Buying for some helpful tips and tricks to help you build a better relationship with your spending.
5. The tidy ups
This last one might feel like it requires a little bit of heavy lifting to begin with but once done, your life is about to become a whole lot easier. And thriftier.
Having an organised home is the number one best way to save. Are you someone whose pantry is full of food but you “don’t have anything to eat”? Then listen up.
Everyday our brains are racing to keep up with our mental to-do list. A messy wardrobe or pantry is adding to that list.
When our brain is doing mental gymnastics trying to figure out what we have at home, what we need to buy, and what we’re going to eat this week, it implodes. Aka: overspending, overindulging, vegetables wilting. Let’s lighten the load on our brains and our wallets.
Read ‘Messy Life, Messy Money’ now to lighten the load on your brain and your wallet.
There’s no such thing as a quick fix or shortcut to budget success, whatever your friend says. But if you take the time to get these five foundations right, you’ll change your relationship with your money forever.
Saving will suddenly seem totally you, totally doable, and a whole lot more exciting.
Ready to create a budget that sticks? Here’s what I want you to do:
- Track your current spending. All. Of. It.
- Ask yourself what you really value.
- Set a goal.
- Confront your triggers. Work on them.
- Tidy up the mess. Put on some tunes and we’ll make it fun, promise!
Next? Choose a budgeting strategy. There’s a handy guide to help you with that here.