Managing your budget for the New Year
January is typically characterised by making and promptly breaking New Year’s resolutions. But here’s one worth keeping – how to be better with your money.
Many Kiwis pour their hard-earned cash straight down the drain each year. December 31st arrives and we wonder where on earth our bank balance disappeared to.
It’s always possible to be better with our money, but it does require a concerted effort – particularly if you have a family or are planning on retiring in the next few years. Make 2016 the year you get back into the black with these budget-friendly tips.
1. Track your spending. Tally how much you earn, subtract how much you spend, and analyse the difference. The best way to monitor your spending is to track every cent in a diary or through an online budgeting tool such as sorted.org.nz. The more visible your spending, the more obvious it is how much you’re wasting.
2. Prioritise debt. The sooner you settle your debt, the less interest you’ll have to pay. Consider asking a financial specialist for a consolidated loan that merges all your debts into one and makes it easier to track. Ask your friends, family or neighbours for a personal recommendation.
3. Emergencies & long-term spending. It’s hard to split expenses like car registrations and home maintenance into monthly payments, so put money aside every month into a longterm spending fund so it’s there when you need it. Budgeting experts also recommend keeping 3-6 months of salary aside, just in case a job loss or serious illness prevents you from working.
4. Change the way you spend and socialise. Always write a list before you go to the supermarket and shop around. Join a library for you and a toy library for the kids. Switch your gym membership for a daily run or find others to train with. Invite friends over for dinner rather than going out – or invite yourself to theirs! Catch up on a beach walk rather than over coffee. Carpool with colleagues and take a packed lunch to work. Overhaul your insurance policies, just in case you’re paying more than you need to.
5. Connect with your community. Use Neighbourly.co.nz to set up and find free family-friendly community events. Share surplus fruit and firewood; sell unwanted goods and claim freebies; and ask for budget-cutting suggestions just in case anyone else has some good ideas.
6. Use rewards programmes and credit card point systems. These let you earn treats or dollars while you spend. Sign up for a credit card that earns airpoints or dollar-value rewards; use it to pay for every expense, then pay it back immediately. Start doing this at the beginning of the year then use your points balance to cover next Christmas.
7. Don’t forget to have fun. Good budgets recognise that life is meant to be lived too, so make sure you factor in some fun. Go to the movies on Cheap Tuesdays. Go out for dinner at BYO rather than five-star restaurants. Beach days are far cheaper than monthly trips to the zoo.