Budgeting

Reduce stress by making a simple budget

Living from pay day to pay day is never fun, and it’s always reassuring to know that a low-rate personal loan is within arm’s reach when you really need help.

But by carefully dividing our budget into three categories – needs, wants and debts/savings – there is a way to turn almost any level of income into a stress-free and satisfying lifestyle.

Needs – 50%

The key is to start right at the basics, and the most fundamental of everything we spend our money on are, by very definition, our needs.

Up to about 30% of this alone is our housing, including rent or mortgage, rates and insurance. But also factoring into the 50% of our pay set aside for our needs are utilities, transportation costs (including petrol and registration), and food.

Wants – 30%

Second, after your needs, are your wants, but that doesn’t mean they are not also firmly set aside in a simple budget.

This is where holidays, entertainment, clothes, eating out and other discretionary spending on things like hobbies and gifts for ourselves and others are factored in. In other words, while we could live without spending a lot on them, life wouldn’t quite be the same.

‘Wants’ is also where you can get a little imaginary: if you don’t eat out a lot, you might be able to afford a better mobile phone plan, for example.

Debts/saving – 20%

To get out of the cycle of living from pay day to pay day, the third element of a simple budget plan is also crucial – saving.

Saving money is not just an added bonus if you’ve had a particularly good week and have something left over; it’s crucial so that emergencies don’t catch you out, and you can plan for the future, for example by saving for a house deposit or making extra payments on your home loan.

Servicing existing debts is also important on the road to financial independence and goes hand-in-hand with savings in order to plan for a successful future and retirement.

Credit 24 is committed to assisting people with minimising the stress of everyday living by putting unsecured personal loans within reach for a rainy day.