There are a lot of challenges we face, but one of the greatest is managing our budget. This is especially the case when the cost of living - which is out of our control - starts to spiral upwards unexpectedly. It can really make us feel powerless. There is, however a simple solution that will put you in control regardless of your income, expenses, or debts - and that is budgeting. To get you started, we’ve pulled together these 4 strategies to help you manage your spending and maybe even save a little bit too.

Create a budget

Having all your numbers written down somewhere is a great first step. It could be as simple as a piece of paper or a notebook, or as complex as a multi-layered spreadsheet. As long as you can cross things off, add things in and update when payments have come in or out. To get started, decide on your ‘survival’ expenses – food, shelter, and utilities, because when things get tight and you need to cut back, these are the priorities you’ll need to protect. This means rent or mortgage payments, groceries, power, water, and gas.  Next comes the everyday expenses that are important but not essential to everyone. This includes the costs of having a phone and access to the internet, owning a car, insurances, miscellaneous fees, and self-care costs like medical appointments, medications, personal hygiene products, haircuts, and even gym memberships, and music or TV subscriptions. It’s important to give yourself some spending money also because quality of life costs money too, and if you don’t make it fun and realistic you won’t stick to it. 

Once you have all your expenses in a list, add in the average amount you spend on each item per month, with a sum at the bottom reflecting the total of all those things combined. Then you add in how much money you have and how much comes in regularly and compare. Ideally the balance is positive, and you can add savings to your list. If it’s negative, then you need to go through the list and work out where you can cut back or how to increase your income.    

Reduce your expenses 

Seeing where your money goes in black and white shows you where you’re overspending and is a great motivator for cutting back. Maybe you need to eat out less, reduce your spend on coffees, or switch to a cheaper provider for some of your bills. Late payments on bills incur fees which can add to your costs so setting up direct debits helps avoid that. Getting on the phone to talk through debts can often result in penalties being waived, payments being reduced, and more time allocated for debts to be managed. If you have debts that are greater than your current regular expenses, it might be worth cutting back on all non-essential spending for a bit and channelling the extra money towards them. 

Housing expenses can be the most difficult to stay on top of so if you’re current living situation is no longer financially realistic for you, it might be worth looking for new solutions. You could move out of your current home and stay with family or friends in the short term or share with someone to reduce the expenses. In more extreme circumstances, Carry On offers crisis accommodation and subsidised housing, while Veteran Housing Australia also has great affordable housing support for veterans and their families. 

Increase the money you have coming in

If you simply don’t have enough money to cover your living costs and you’ve reduced wherever you can, the next step is to look at ways to increase the income you have, where you can. Cooking, cleaning, caring for a neighbours’ child, gardening, ironing, and mending are all small things, but that kind of support is priceless to busy people and allows you to earn some cash while making a huge difference in the lives of others. If you have capacity for a part time job in line with your skills, even better. 

There are plenty of extra ways to make a little cash on the side too – both regular and as a quick fix solution in desperate times. Turn something you love into an online side hustle by selling online, or hunt the flea markets and resell treasures for a marked-up price. Clean out your cupboards and sell off things you no longer want for cash. Old appliances, tools, equipment, or instruments you never use, can bring joy and solutions to others, and give you a cash bonus at the same time. 

Maximise your Savings

In time your budget will look healthier, and you may even be able to save a bit or grow the savings you already have. To get the best savings results, maximise your money by putting it into the right kind of account. Many savings accounts offer high-interest rates, so the more money you save, the faster your balance will grow. You can also decide on small savings goals kept in a high-interest account that you can transfer to a term deposit with a better rate when your goal is reached. This gives you regular achievement boosts to keep you motivated and a double shot at earning interest! If you do this, look for a term deposit that has a good rate, low fees, and flexible options for withdrawal at the end of the term. The other advantage of a term deposit is that it removes the temptation you may have to spend it.

At its essence, a budget requires you to know what your expenses and debts are and then to line those up against the money you have in savings and the money that’s available to you each week or month. Once you do that you can then see how it all fits together, shuffle things around if that helps, or make some calls to get payment plans sorted if necessary. What it means is that you are in charge, you can stay across what’s happening and there are no nasty surprises around the corner.