Lazy, set and forget budget! Money Management for beginners.

For the “stick your head in the sand” people out there…. You know who you are!

Everyone hates making budgets! Even I hate budgets and I work in finance, there is nothing exciting about this at all. But I do think that not having to worry about money IS exciting. So let’s try to focus on that because the fact is, if you don’t know how much you spend, how will you ever know how much money would make you financially free?  Now I know that term is corny and I hate using it but since we have started this journey it has become the big focus. Financially free to us means knowing you have exactly the right amount of money coming in and going to pay for current lifestyle. If your lifestyle includes mansions and fancy cars then we may not be talking about the same financial freedom.

Try not to look at a budget as cutting down on things and missing out on life. Look at a budget in the sense of a diet. Everyone is on a diet, whether they are on planned eating regime or they literally eat whatever they can get their hands on either way these are both still diets. The same goes for a budget.

Whether you have thought about it or not you currently already have a budget in place, it may not be one that is working you towards being financially free or in control of your finances but it is what it is.  Think about how you currently manage your bills, pay etc. Do you wait until you receive the bill in the mail before you start to work out how you will pay for it? Think about what your current habits are with money and determine if they are helping you or hurting your finances.

Ok so here are my 3 steps for a lazy budget and I mean lazy, I hate doing budgets myself but now that I have put these 3 steps in place we barely have to look at our bank account to know what is going on and I love that.

STEP 1: This Saturday/Sunday while you are having your morning drink, in our case COFFEE, get out all your bills, everything you know you pay for or if you have a good memory (I don’t!!!) just jot them down on paper and what frequency you pay it.

For example:

Rent: $340 weekly

Electricity: $320 per quarter.

Water: $300 per half year

Now when do you/your partner get paid? Take all your bills and divide into that frequency, for example, we are fortnightly so rent would be $680 ($340 x 2), electricity $55 ($320 / 6), water $24 ($300/13) etc and keep going through all your bills until you have each part per fortnight.

Now this is where it gets tricky, add up all of these amounts…….. If this is more than your pay per week/fortnight etc, we have a problem! But don’t despair I will write more blogs on this soon.

If the amount is not more than you pay (congrats you are living within your means, WOO!) move on to Step 2.

Ok good step 1 done, good work!!! This is the hard stuff!

STEP 2: Log in to your online banking the SAME day (if you don’t have online banking GET IT, it will change your life! How cool is technology, I can do everything on my phone LOVE it!)

Now this is the real key! The day you work out how much it is per frequency (fortnightly etc) go into your online banking and set up that amount to be deducted from your pay each frequency TODAY.  Most bills will have BPay details so you can pay however much you want to them and whenever you want. This is important you have gone to all the work of working out your total spend each frequency just too live so don’t stop now. This one step will significantly improve your financial future basically by the time your next bill arrives.

Now for things like car registration, you can’t really pay for this weekly or fortnightly etc but to ensure you have the cash to pay for it when it comes up. So look at some options, if you are a good saver (I am not, I know it’s a crime in industry!), so I needed an account where I couldn’t access it easily. If you are a good saver a bank account that is not your normal everyday account may be enough, it wasn’t for me, I needed an account that I couldn’t access with a card anyway that’s another story. Talk to your bank they will be able to tell you what is best for you. Set up whatever account they tell you and start paying the weekly/fortnightly amount of money into there.

Savings and investing is a really important step as well but won’t be covered in this blog, this is purely the simple easy way to start an effective budget, once you are comfortable with this then you can move on to more fancy stuff J

Ok step 2 is done, now onto my favourite Step!! The last one!

STEP 3. Excitedly wait for your next bill

Yep, that’s right if you set this up straight away you will be excited for you next bill because it is likely that your next bill will have $10 owing or even $20 in credit and that is the best feeling!!!! From then on just monitor each bill, if you seem to spend more and the bills are coming in and are not low balances or in credit then re-work your calculations for the per week/fortnight amount. It may mean that you need to pay a bit extra each frequency. But how simple is that, knowing that you may only have to adjust slightly every now and again. Budget taken care of, SET and FORGET….. my favourite!!

So go on, try it this weekend and see if it helps change your life!