Tidying up your finances may just change your life. Here’s some tips to help manage your money in 6 easy steps.
Clutter – we feel stressed just thinking about it. Especially when it comes to financial clutter. Accounts in disarray, a budget ditched or never attempted, credit card interest accruing and savings a hazy and far-off dream…
Sound familiar? Then here’s a little secret: organising your finances could reduce your stress levels and may even improve your quality of life. Happily, the path to managing your money is simple, actionable, and rooted firmly in reality.
Here’s how to tidy up your finances, one marvellous step at a time… starting with the all-important budget. And remember – we’re all different, so always think carefully about what will work for you and your personal financial circumstances! Seek advice where you need it.
Step 1 – Plan
The first step to organising your finances? Planning exactly how you’re going to do it. Before you create the all-important budget in Step 6, you’ll need to sort your spend into wants and needs.
Expenses such as rent or mortgage, loan repayments, bills and petrol fall neatly into the ‘need’ category. But when it comes to ‘wants’, things aren’t quite as straightforward. No problem, just jot them down (all of them!) and we’ll divide and conquer later.
Need help at step 1? Did you know our lending specialists can help you from scratch – using a blend of technology and 1:1 planning to help analyse your current spending habits.
Step 2 – Categorise
Grouping like-minded expenses together under headings will make it a whole lot easier to input them into your eventual budget. It’s kinda fun, too. Here are some suggestions:
- Essentials: All the everyday living expenses likes rent, utilities, health insurance and groceries. And the daily latte? Well, it might be an essential for some – it’s your call
- Debt:We’ve all got debts to manage so listing them out is a handy way to stay across how much you owe and avoid letting any get forgotten! When you’re done, you might want to take a look at these tips for getting on top of them
- Food and drink:Restaurant meals, pricey takeaway, a case of citrusy cool-climate Chardonnay… Whatever wets your whistle in the food and beverage department
- Entertainment:Subscription services, live music, movie nights, Beethoven by candlelight… You get the idea
- Health & wellness:No, we’re not just talking about your gym membership. What about that collagen powder for your green smoothie? Your gym gear and running shoes? Those pricey vitamins and supplements? Expenses in this category can quickly add up, so don’t forget to include it
Step 3 – Visualise
So you’ve sorted your messy finances into a tangible list of wants and needs. Now it’s time to get visual about your goals more broadly. Unroll a fresh sheet of butcher’s paper, grab a selection of magic markers and create a good ol` ‘mind map’. A mind map, or visual brainstorm, is a great opportunity to reflect and recognise what’s truly important to you. What do you love? Where do you see yourself in 5, 10 and 20 years? What’s standing in the way?
Recognising your goals and getting them down on paper is a useful step in decluttering and simplifying not just your life, but your finances too.
Related Post: 5 simple steps to financial independence
Step 4 – Prioritise
Now that you’ve visualised your goals, it’s time to get your priorities sorted. What are your short, medium and long-term financial goals? Maybe you’re looking to travel around Australia in a campervan, start a share portfolio in a few years, and purchase an investment property in a decade or so. Or, to pay off your credit card debt! Break those priorities into bite-sized chunks so you can set savings goals. How much do you need to save for your trip? Divide the total amount into a monthly savings target or use our budget planner to keep you on track.
But ask yourself: can you save for both priorities at the same time? Perhaps you’d prefer to get that holiday out of your system first before you start saving for a share portfolio? Best thing is, these are your goals so you get to decide. As for that investment property, you’ll want to take a big-picture view of your finances – including any assets or shares you own – before creating a long-term plan of attack.
Step 5 – Cull needless expenses
Are your multiple streaming services a thankless habit, or do they actually improve your quality of life? Is that online shopping addiction truly serving you? No? Then gently let them go. The simple act of culling needless expenses while celebrating those that delight and inspire you is a sure-fire serenity booster.
Step 6 – Create a budget
Now that you’ve systematically tidied up your finances, you’re in the perfect position to create a realistic and achievable budget. With our budget planner input your income, expenses and other important monthly costs – and voila! This nifty tool creates a brand-new budget for you. This is only a starting point – you can build and develop this so it’s as detailed as you like!
Ready to embrace financial wellbeing?
We’re here to support you every step of the way. If you’re ready it’s easy to connect with one of our local lending specialists. We’re available via phone, chat, or in person.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.