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This
booklet gives information of a general nature and is not intended
to be relied on by readers as advice in any particular matter.
We
suggest you consult your financial planner on how this information
may apply to your own circumstances.
Other
formats
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USE YOUR BUDGET TO PLAN FOR THE FUTURE
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it is time to work out how much you will spend on expenses
over the next year. Use a fresh sheet of paper or a new
spreadsheet and set down the amounts, keeping in mind
the areas where you could cut back. Most of us underestimate
how much we will spend. It is hard to foresee some of
the things we may find we need over the course of a year.
For example, you may lose your mobile phone and have to
outlay for a new one. Or the price of petrol could go
through the roof. One way to overcome this is to increase
all of your expenses by 20%. It may seem like a lot, but
it's actually about the amount we misjudge on our spending.
To give yourself the best chance of sticking to your budget,
put aside some money from each payday for large annual
expenses, like your annual holiday, car insurance or Christmas
presents. |
PLAN FOR SURPRISES
It's
also good to expect the unexpected. How would your budget
cope if you became ill or lost your job? Earmark a bit
of extra cash for those unforeseen circumstances that
could throw a spanner in your plan, especially in the
first year or so until you can build up an 'emergency
cash fund' (Read more about emergency
cash funds in the next section - Step Five - apply some
savings strategies).
As before, add up all your income and expenses and calculate
if you will have any money left over at the end to put
towards your goals. If not, readjust what you plan to
spend until your expenses at least equal your income.
This may mean curbing some of your spending habits, which
may take a bit of work on your part. It could be a matter
of adjusting your attitude too. Identify any 'unhealthy
attitudes' to money you could have, such as spending to
make yourself feel better or seeing borrowed money as
your own (Read more about
how to identify warning signs in Step Seven).
STICKING TO IT
Track
your spending throughout the year against your budget
so you can see if you are meeting your targets. This will
give you an opportunity to readjust your spending plans
for the remainder of the year if you need to.
If you continue to budget over the years, you will get
better at knowing your spending habits and finding ways
to save.
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WHEN SHOULD YOU REVIEW?
You
should consider redoing your budget each year or
making adjustments when your circumstances change.
Below is a list of the situations that could trigger
a review.
When you:
- Receive
a pay rise
- Are
married or divorced
- Have
a child
- Start
a new job
- Move
to or from the city
- Start/
continue education
- Purchase
a car
- Inherit
soem money or a debt
- Buy
a home
- Get
a mobile phone
- Suffer
an illness that disrupts your income
- Enter
retirement
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TIP
BLOWING THE BUDGET?
If
you are the sort of person that can't resist an
impulse buy, stop and ask yourself these questions
before you hand over your money or credit card.
- Do
I really need it?
- Am
I buying this to make myself feel better?
- Will
this blow my budget?
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