In my opinion one of the best things you can do to make life easier when you decide to move out of home is setting up a budget. Why? This is something you can begin even before you decide where you going to live, and be able to save enough money to pay for bond and any furniture or white goods you may need.
Not only this, but in my own personal experience, I found that not having a budget caused me to constantly call my Mum to send me more money just to be able to pay for my bills and food. I would spend all the money I had worked for on things I just didn’t need.
So this brings me to the most important thing we must consider when creating our budget; understanding the difference between a NEED and a WANT.
When considering our budget we need to factor in fixed costs and variable costs. Fixed costs is a fixed amount that does not change from week to week. This can be your phone bill, your rent and your utility bill if you have a plan for it. Variable costs is costs that will change from week to week. Such as food and public transport.
We must remember these factors when creating our budget or the budget will fail.
After we factor our fixed and variable costs into our budget, we can then begin looking at our luxuries. Luxuries are anything that are not necessary for survival. This includes cars, gym membership, shopping, going to the movies, alcohol, going out for dinner, or anything else that would be considered unnecessary spending.
So a great way to begin our budget is organising our bank account. The easiest way I have found to make my own budget work is by setting up a bank account for a specific financial action. This means I have a separate bank account for each of the following:
Doing it this way I am able to get my income in one main account, and distribute my fixed costs into their respective accounts and not have to worry about spending my rent money by accident. For variable costs and any luxuries I have, are left in the spendings/income account. This account is also connected to my bank card. Your spendings/income account should be the only account connected to a bank card.
Distribute your fixed costs and organise your variable costs to be paid on pay day. This means go food shopping once a week the day you get paid, as well as set aside your public transport money for the week also. Doing it this way means you shouldn’t go hungry and be stuck without a train or bus ticket. If you’re saving for something, this also the time to put that money aside so you don’t spend it. What ever money you have left over is for luxuries.
When we are writing out our budget, income is obviously a vital part in making it all work. To put it simply, if you do not earn enough money to pay for your fixed costs and variable costs, then your budget will not work. Make sure you factor in how much you earn for the week, and if it will be enough to support yourself. If, like me, you have a part-time job, then every week you get a new roster, calculate how much you will be earning for that week so you can plan ahead.
Being organised with your budget will also make it much easier. Writing up your budget in an excel spreadsheet will help you keep on track. I like to set up my spreadsheet so that I each week I enter in how many hours I worked, and how much I earn per hour, excel will produce how much I can put aside for savings and how much I have left to spend after my disposable income.
Finally, small steps such as checking your bank account daily and your recent transactions frequently will help prevent fraud occurring in your account and give you insight into what your spending your money on.
Stay tuned for more tips on moving out of home.