Income & Budget Health Check: Are you spending more than you earn?
If your outgoings are more than your incomings, it’s a strong sign you need to start a treatment plan to improve your financial health.
“I will not spend more than I earn” is a financially responsible and logical mantra to keep in mind, applicable to everyone striving for financial wellbeing. The good news is, all it takes is some mindful considerations and careful alterations to your current spending and saving habits to achieve it.
We’ve prepared 10 strategies you can utilise today to improve your financial health and wellbeing.
- Automate your savings
Do this now. Choose a reasonable amount you’d like to set away as savings. Set up an automated payment to your savings account and schedule it for the same day your salary is deposited. You’ll be saving ‘automatically’ without lifting a finger.
- Plan your spending
Are you susceptible to going shopping and coming home with multiple items you don’t need? The lure of bright lights, impressive shop displays and those ever tempting sale items can trigger our impulse to spend. Financially healthy people monitor their impulses, and ensure their spending is a planned act. So we must plan ahead! Write a shopping list and stick to it. Write your wish list and stick to it. Don’t let your impulses carry you away!
- Pay with cash
Studies have shown consumers will spend up to 30 percent more on an impulse purchase if tapping their card, rather than handing over their cold hard cash. Using plastic takes away a sense of reality, the detachment from physical money makes the spending experience feel less of a blow. Withdraw the cash you have planned to spend for the week, and avoid senseless tapping.
- Give your bills a reality check
What have you subscribed to that chips into your earnings each month? Do you really use Netflix enough? Do you need to have the ultimate phone plan? Do you need 500 GB of broadband? Could you opt for a walk on the beach rather than the gym membership you end up using once a month? Take the time to mindfully consider whether your billed services are indeed serving you, or limiting your savings potential.
- Reflect on your routine
What does an average days spend look like for you? Consider where and when you get out your wallet throughout the day, and why.
Coffee on your way to work?
Lunch at a café?
After works drinks?
Our routines can impact our spending significantly. Taking steps to alter your routine to suit your finances better, and committing to practicing these regularly, will significantly improve your cash flow health over time.
- Do it yourself
A bit of hard yakka on the weekend will help you save your hard earned cash. Make an effort to stop paying others to do the things you are really capable of. Instead, dedicate a few hours to tidying and cut back on cleaning bills. Hand wash your shirts instead of dropping them at the dry cleaners. If you truly value these services in your life, why not look at engaging the professional to carry out the bare minimum, or drop to engaging a fortnightly service rather than weekly.
- Become an eco-consumer
Take a look around – how many appliances, lights, heating or cooling devices do you have active in your home? Is your home as energy efficient as it possibly could be? Have you got the option of a solar offset for your power bills? Take the time to consider this, and save the environment as well as your hard earned cash.
- Clean out your cupboards
What commodities do you have hiding in your cupboards than could be converted to cash? Old mobile phones, clothes with tags still on, fad gadgets you used once or not at all.
Collect them all and get rid of the clutter. There are plenty of ways to sell these items online or through social media. The result – cash in hand, and a clearer living space to enjoy.
- Spend your time on a good cause
Spend your day without spending a cent. Do something to make the life of another a little brighter. Volunteering with a cause or a charity you are passionate about can be a great way to enrich your life. Whether it’s giving company to a senior citizen, cleaning up beach litter, preparing food in a soup kitchen, guaranteed you will cash in on good feelings, higher self-esteem, self-worth and purpose. These are all feelings many often strive to achieve through excessive and mindless spending. This way you get them for free!
- Add up the health benefits:
Not only is a healthy income and budget balance good for your financial health, you are bound to see benefits in your own personal wellbeing. Financial health has been proven to lower individual stress levels, and even improve sleep. It allows the freedom to actively pursue your financial goals and aspirations.
Here’s to health and wealth!
*Please note this article does not provide specific advice tailored to individual circumstances and you are encouraged to speak to your accountant before acting upon the above.