Let's talk ... budget

Let's talk. Budget.

A tiny word that’s worth 10 points in Scrabble. An estimate of income and expenditure for a set period of time, says the Oxford Dictionary. I prefer to think of it as a plan to help me see where my money is going. ​

I love a plan. And I love detail so setting up a budget is easy (and almost fun) for me. This love for a plan is not shared by my husband! But when we first got married, we had to work out a budget to ensure we could meet the mortgage and the necessities of life. To this day, I can remember exactly what the food budget was. ​

A plan helps you to make conscious money choices upfront. Whether it is detailed or minimalist is neither here nor there. The point is it has to work for you. Whatever yours looks like, here are some important things to consider:​

• Know your income - salary from your job, any government payments and/or money from side hustles,​

• Work out your needs – the essential things you need to spend to live​

• Work out your wants – the things you don’t need but you’d like to spend on​

• Save what’s left – that’s if you have anything leftover!​

A thought on needs and wants – how do you tell them apart? Here’s a good example – I need shoes to go to work. Shoes are a Need, but that pair of $400 heels that I’m lusting after, is more of a Want.​

That is how I budgeted for years – with what’s leftover put into Savings. But I want to introduce you to what I think is a better way to plan. It doesn’t require fancy excel skills – just one very important principle. Pay yourself first. ​

We call it the Bank First Active Saving System. ​

Authored by Kate.​