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Track your spending and stay on top of your money

Published 5 December 2019

Feeling anxious about your finances and want to manage money better? Smart habits, saving tips and strategies can help.

Getting to the end of the month and wondering where your money has gone is a common experience for many Australians. More serious are the levels of debt Australians are accumulating – levels that not only create anxiety, but also adversely affect people’s levels of financial well-being.  Thankfully there are some budgeting tips, savings strategies and small behavioural changes you can apply to help manage your money better.

Track your spending

It’s hard to get on top of finances or begin a savings regime without knowing exactly where your money currently goes. A good starting point is to download transaction records from your accounts for the past three to six months to help identify where you’re spending your money.

Group the transactions into categories such as rent or mortgage, bills, food, transport, insurance and other essentials needed. Once you know how much you’re paying for essentials, you can then identify other outgoings you can trim or remove all together. The daily morning coffee may not seem like much at $4 but over a month it becomes $80. Likewise buying lunch every day can easily cost $50 a week or more than $200 a month — which you may not realise until viewing the transaction history all together.

ANZ financial planner Chris Lin says “Once you understand this, you’ll have a better idea of what you can afford to save and then you can work towards putting aside this amount every month.”

Another tip to see where your money goes (and how fast you spend it) is to take out a specific amount of cash each week for extras such as coffee, dinners out and socialising - and stick to it. It’s easy in these ‘pay-wave’ days to lose track of your spending but by using physical cash it will remind you of how much you’re actually spending and give pause for thought. It’s harder to justify spending $20 when there’s only $50 in a wallet, whereas it’s much easier to ‘tap and go’ and feel disassociated from the choice to spend.

How to create a budget

Now that you have an idea of where your money is going, it’s time to create a budget.  Creating a budget can help you find the right balance between spending and saving, and provide a clear path to saving goals and be better prepared for unexpected life events.

The ANZ Budget Planner tool is free for anyone to use, and helps you calculate a budget step by step.  If you’d prefer to do it yourself consider the steps below:

  • Create a budget based on how often you’re paid
  • Make a note of the total amount incoming from each pay
  • Calculate how much bills or bigger expenses cost then break it down into a pay cycle.  For example a quarterly power bill is $450 — this breaks down to $150/month, $75/fortnight or $37.50/week
  • Use your transaction history to plot out the essential expenses you need to pay
  • Then subtract the expenses from the incoming pay to see what’s left over.

Another benefit of creating a budget is it identifies how much money you need to get by each month. School fees, the mortgage and bills need to be paid and if you don’t have a financial buffer saved you may get caught out if an unexpected expense crops up. Income protection offers peace of mind as it can provide regular monthly payments if you’re out of work due to critical illness, injury or redundancy. Knowing you’ve got insurance in place can help you feel more in control of your money and better prepared.

Start saving

Once you are in control of your spending, you can then turn your attention to saving. Establishing a regular savings habit is one of the easiest ways you can feel more in control of your finances. ANZ's 2018 Financial Wellbeing Report (PDF, 5.2MB) indicated having a savings buffer of at least $1,000 was associated with higher financial well-being and with one in four Australians having no savings at all, it’s important to get started.

No amount is too small to start saving, the key is to begin and contribute regularly. Aim for $1,000 in savings to begin with and then work towards a larger amount you can use if unexpected costs occur such as urgent dental work or medical care. You can use ANZ’s Savings Calculator to get started.

So how do you actively save? Michelle Commandeur is ANZ head of financial inclusion and says the best way is to set a smart goal that is specific and measurable. “When you reach a financial goal it gives you a sense of achievement and confidence,” she says. “There are other tips and tricks, such as setting up automatic direct debits into savings accounts or directing a portion of any tax refund you may receive into a high-interest savings account.”

Managing debt

Australians are recording higher levels of debt than ever before. The latest figures from the Australian Bureau of Statistics show that in the 12 years to 2015-16, average household debt had almost doubled, with debt levels rising from $94,100 in 2003-04 to $168,600 in 2015-16.

And it’s not just big purchases Australians are in debt for, more and more of us are relying on credit cards to cover everyday expenses.

ANZ’s 2018  Financial Wellbeing Report (PDF, 5.2MB) found two key behaviours can increase a sense of financial wellbeing – active saving and not borrowing for every day expenses. Commandeur says “Of course, financial wellbeing is affected by other factors such as income, attitudes to money and financial knowledge. While these are important, they aren’t as important as the two key behaviours.”

Commandeur also states a person’s financial wellbeing isn’t just a reflection of their income. “People on lower incomes can have high financial wellbeing and conversely, people on higher incomes do not necessarily have better financial wellbeing,” she says. “This is because those with low financial well-being might not be demonstrating those key behaviours that help people to stay on top of their money and build resilience.”

“If I could give people any other advice it would be to not rely on your credit card,” ANZ financial planner Chris Lin says. “Many people use credit cards to get points but if you miss a couple of payments you will be charged extremely high rates of interest so it’s not doing you any good.”

Protect your income

Once you are in control of your spending and are building up your savings, it’s important to protect your income with appropriate insurances, such as income protection or life insurance. This way, your savings won’t be destroyed in the unfortunate event you die, are unable to work due to illness or injury, or you’re made redundant.

Start today

Whether you want to create a budget, open a savings account or take out income protection – do something today to take back control and manage your money better.

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