Pigot Miller Wilson

Accountants & Advisors

A new year often brings about resolutions and grand planning for the year ahead. At the top of a lot of lists are personal budgets, especially when living costs are rising and uncertainty abounds in global financial markets. So it’s worth having a look at how we’ll cope with the increasing cost of living and how we can keep some resolutions on track.

Save more or spend less?

Is it easier to save more, or to spend less?

They might sound like the same thing. After all, saving is what we do with whatever’s left over after spending, isn’t it?

Well, not quite. It’s easy for spending to get out of control, and many people actually find it easier to focus on reducing their spending than saving towards a goal.

Take control

To begin with, work out where your money goes. Start by keeping track of everything you spend and what you spend it on. Split it into categories based on necessity. Things like mortgage repayments, utilities and essential food obviously go in the ‘must spend’ group. Some things will be ‘optional but important’, and others will fit into the ‘fun’ category.

Do I really need this?

After a few weeks you’ll have an idea of where your money is going then it’s time to start asking yourself a couple of questions:

• Do I need to spend this much on this category?

• When I over-spend, what can I do to prevent it happening again?

It’s worth remembering that every year in Australia we spend billions of dollars on food we don’t eat, clothes we never wear and services we don’t use. So for many people, gaining control over spending doesn’t mean ‘doing without’, it just means being sensible about spending. There are a lot of things you can enjoy for free, and you can even turn a ‘thrift campaign’ into a hobby.

Watch debt

Pay off credit cards within the interest-free period to avoid high interest costs. If that’s not possible, investigate consolidating high-interest debt into home loans or other lower cost loans. When borrowing, make sure you leave a ‘comfort zone’ to ensure you can meet your commitments.

Talk to us at Pigot Miller Wilson about preparing a personal budget that doesn’t require you to do without or give up everything you love.