Analysing your spending habits with a budget can be difficult, but it is the core of any good financial plan. I know budgeting to most people seems like a dirty word as it implies missing out on all the good stuff.

Whereas when I explain it to my clients I simply say, having a budget doesn’t mean you need to miss out on the good stuff, as long as you know where your money is going each month. So if you want to buy something expensive or treat yourself, that’s fine, as long as you know what that will do to your cashflow and you are in control.  

Too many people I meet say they live paycheck to paycheck and worst, just don’t know where all the money goes.  Tap and go, credit cards, pay as you go and afterpay type systems, make getting control of your money harder than ever.

But importantly, once you take the time to check out where your money is going each month, you may be surprised how much you spend on, for example Ubers or take-away. You then have options, and you can start to find ways of cutting back to have money to save.

I have been able to get some really good tips from Phil Allen of My Debt Adviser to help with some of the stats and points of this story so appreciate their help.

Did you know, last Christmas, credit card spending plunged Aussies $24.3 billion deeper into debt.

So if your finances have taken a pounding of late, here are some tips to help get you back on track.

Reassess your spending

It’s a new year, so maybe it’s time for a new budget. Any budget should simply show all your income and outgoings for each month. There are plenty of budgets online including on The Money Sandwich website and also moneysmart website has a good one as well.

Be sure to include fixed expenses (like rent and electricity), debt (credit card, loans, etc.) and unexpected expenses (car repairs and pet bills).

Shop around

While you are reassessing your finances, it’s a good idea to shop around to ensure you’re getting the best deal.

Get in touch with everyone from your insurance company to your electricity provider and ask whether they can offer you a discount or a better deal. You’d be surprised at what they’ll come back with if they think you may go elsewhere.

If you already have a mortgage, ask your finance broker to compare the market for you. It may be a good time to consider refinancing to a more competitive rate.

Get serious about saving

Consider what your ‘need to haves’ versus your ‘nice to haves’ are.

You might need to ditch your gym membership or reassess your social habits to supercharge your savings goals.

Set your savings goal

Set yourself a savings target so that you can factor it into your budget and work towards it.

If you don’t have time to create a budget, one tip we always tell our clients, is ‘Pay yourself first’. That is if you get paid, make the first bill you pay, yourself into a separate bank account.  That way those who get to the end of the month and nothing left to save, at least this way, you have already done your savings for the month, first.

If you’re planning a property purchase, we can run you through how much money you’ll need for your deposit. In general, we suggest aiming for 20% of the purchase price to avoid paying Lenders’ Mortgage Insurance.

Knock over your debts

Lenders assess your creditworthiness on the amount of money you already owe, your ability to repay your debts and your capacity to take on more debt.

Paying down any credit card debts or personal loans prior to applying for a home loan could improve your borrowing capacity and give you the best chance of being approved.

Aim to pay off credit cards in 10 equal payments based on what you can afford. If you afford $200 per month, your credit card can maximum go to $2,000 to borrow.  Ignore what the credit limits are of your credit card as you can afford to borrow only what you can pay back easily.

Consolidate if it’s right for you

If you have lots of different types of debt, it may be worth consolidating.

With this option, you essentially roll your debts into one, usually using a loan with a lower interest rate. In some instances, you can roll them into your home loan if you have one, or a personal loan that has a lower interest rate overall.

There are pros and cons of debt consolidation, so it’s important to speak to your financial advisor/coach or accountant about whether this is the right option for you.

Hope this helps with getting your money in order for 2022!


Article by Marc Bineham – Money coach, speaker and award-winning author of The Money Sandwich