The Common Money Mistake That Could Be Setting You Back

Ask any person what they hope to achieve in life and most people would say that one of their main goals in to be financially secure. Not necessarily rich, but comfortable. It’s true that money can’t buy happiness, but there is a huge amount of anxiety that comes with not having the financial resources to pay for everything that you need to. This is where a good budget comes in.

Studies have found that only one-third of people have a detailed budget and even less “prepare a long-term financial plan outlining their savings and investment goals in detail.” The implications of this are huge and with a recent study finding that a whopping 69 percent of surveyed adults have less than $1000 in savings, it’s clear that financial security is becoming an increasingly distant goal for many people.

While making a budget may sound simple, the reality is that not enough people are actually doing it and our inability to budget is driving us to be the most in debt generation of all time. According to Laura Adams, financial expert and author of Smart Moves to Grow Rich, making a good budget comes to down to five simple steps.

1. Calculate your monthly income

The first step is very simple. Dig our your last payslip and take note of your monthly income after taxes, KiwiSaver and student loan repayments. If you have a side hustle or do freelance work, take this income into account too.

2. Tally fixed expenses

Next, list all of the things that you have to pay for. Rent, mortgage repayments and insurance should all be in this section. While many people often consider savings to be optional, it’s a good idea to start treating emergency fund savings as a compulsory part of your budget. If you have expenses that are fixed but irregular (you may only pay them once a year) then it’s a good idea to spread these costs across your monthly or fortnightly budget and set money aside for these in advance.