The cost of living in Australia and many other parts of the world has skyrocketed in 2023. Some ways to achieve greater financial stability include calculating your existing income and expenses, comparing your total income and expenses and reducing unnecessary spending. Be as diligent as you can, until your monthly expenses fall below your monthly income.
- Get a ‘big picture’ view of your finances by comparing your total income and expenses.
- Figure out how much money is coming in by calculating your average monthly income including your gross salary, bonuses and other sources of income.
- Your expenses fall into two distinct categories: fixed expenses, those that stay the same each month and variable expenses, those that change from month to month.
- Determine what expenses you can remove or reduce to maximise your monthly budget.
- If you are struggling to pay off debts, contact Debt Fix for free and confidential debt consolidation advice.
The cost of living in Australia and many other parts of the world has skyrocketed in 2022.
According to the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) rose by 6.1 per cent in June compared to the same time last year. The cost of transport alone rose by 13.1 per cent, largely due to an oil price shock caused by the Russian invasion of Ukraine in February.
These factors, combined with others like rising interest rates, are not just making it harder for people to pay for the things they need and want but also save for the future. This is where creating, and sticking to, a well-planned household budget can help you achieve greater financial stability. Here are a few ways to do just that.
Calculate Your Existing Income
First, you need to figure out how much money is coming in. The best way to do this is to calculate your average monthly income. Add up all your sources of income for a typical month, including your gross salary or wages, bonuses, rental income, dividends, bonds, interest, Centrelink payments, and other taxable income. If you have variable income – i.e. you are self-employed or work a part-time or casual job with varied hours – then use your lowest earning month as the baseline for your budget.
Be sure to account for not just essentials like utility bills, food, rent, and mortgage repayments, but also extras like subscription services, transport, car insurance, and any government benefits you may receive. Doing so will help make it easier to compare credit cards and choose the best credit card provider.
Calculate Your Expenses
Next, figure out how much money is leaving your accounts. Your expenses will fall into two distinct categories: fixed expenses and variable expenses.
Fixed expenses are those that stay the same each month, and variable expenses are those that change from month to month.
When calculating your variable expenses, use the most expensive month as the baseline for your budget. Combine your fixed and variable expenses together to get an average of your monthly expenses.
Compare Your Total Income and Expenses
By this point, you will start to get a ‘big picture’ view of your finances. Most importantly, you will know if your income exceeds your expenses, or vice versa.
If your income does exceed your expenses, great! This means you will have extra money to contribute to other areas, such as paying off debt or building your savings. If however, your income does not exceed your expenses, you should try to see where you can reduce your spending.
Reduce Unnecessary Spending
How much control you have over reducing your spending depends on the type of expense you are dealing with.
Obviously, you can’t magically reduce your rent or mortgage repayments. But you may be able to trim down on expenses you do have control over, such as the brand of milk you buy at the store or how long you have the heater on for in the colder months.
Go over your spending habits with a fine-tooth comb. Cancel subscription services that you don’t really need. Prepare a list before you buy groceries, and don’t deviate from it. Stop dining out and ordering takeaway for a while. Be as diligent as you can, until your monthly expenses fall below your monthly income.
Talk to a Debt Consolidation Expert
Do you have one or more debts you are struggling to pay off, be it unpaid utility bills, a credit card or car loan repayments?
Staying on top of all your unpaid debts can feel like spinning plates. Just when you think one debt is under control, another takes its place, setting you right back to square one. The result can leave you feeling stressed and anxious, causing many sleepless nights.
Talking to a debt consolidation expert can make all the difference. They can give you free, confidential advice tailored to your individual needs. Seeking advice will not affect your credit rating, and they may be able to help you save money, stop creditors calling, and put you back in control of your finances.
Best of all? The steps they give you are realistic and easy to follow, and they may be able to consolidate your debts into one viable payment plan. They may even be able to reduce the amount of interest you pay.
For free and confidential debt consolidation advice, contact Debt Fix today. It only takes 30 seconds to get started and making an application won’t affect your credit rating.