Save more every month with this simple budgeting trick

BY this time next month the federal treasurer will have delivered his first budget but there’s no reason for households to wait until then to tackle their own.

Make a budget without deprivation

BY this time next month the federal treasurer will have delivered his first budget but there’s no reason for households to wait until then to tackle their own.

If you are one of these people who makes sure your watch is always fast so you’re never late there’s a budgeting technique that could work for you.

In the same way that setting your clock forward buys you extra time, budgeting to pay off a little more than needed on each bill can buy you some extra savings that add up significantly over time.

If your phone bill for the month is $65 budget for it to be $70 and you’ll have $5 left over. Or allocate $110 a month instead of perhaps the more realistic $95 a month you expect your electricity bill to cost and you will be $15 better off by the end of the month. If you do this with all your bills it could add up to a couple of hundred a month.

“You’re not going to miss small amounts,” says Lisa Montgomery, consumer finance specialist. “Sometimes it’s really daunting to look at saving large sums because it feels unachievable. But if you take small amounts at the end of each month and put it in a separate savings account it will add up.

“It’s a bit like super. It is not a large amount each month but by the end of your working life it is a large sum.”

It also beats the deprivation method where you decide you have to give something up, like coffee, to save $3 or $4 a day.

It doesn’t matter how you build your budget. It could be old-fashioned pen and paper, an Excel spreadsheet, or one of the many budgeting apps available online or through your smartphone such as pocketbook.

ASIC’s moneysmart website also includes tips and tools for doing a budget.

Here are Lisa’s three steps to a tighter budget

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1. Get to know your money: Review your transaction account the past six or 12 months. Be your own personal accountant by doing the numbers on what you earn, spend, direct debit and BPAY.

2. Cash is king: if you have cash in your wallet you are less inclined to spend it because you have an emotional connection to cash. Choose cash over pay wave or eftpos — you might be surprised at how much less you spend.

3. Set goals: Setting large unrealistic goals for saving money is one of the biggest mistakes we can make with our money. Small incremental savings are less noticeable on a day-to-day basis but will add up over time kept in a ‘no touch’ account.