Budgeting in the new financial year

Another financial year has run its course, so if you haven’t already done so, you are probably about to have your tax return done. While it’s great to think about all the purchases you might make with your tax return, this time of year is also an excellent time to take stock of your finances. How has your money risen since last year this time? Are there things that you did right? And how do you plan to boost your finances over the upcoming financial year? We ‘re sharing a few budgeting ideas in this article to help you refocus for the year ahead.

Using the envelope system but going digital
The envelope scheme may have been used by your parents, and even your grandparents, as a way to budget when they were younger. As the name suggests, you put a given amount of cash for each cost into various envelopes. You may have a shopping envelope, a bill envelope and a transportation envelope. With so many digital banks now enabling individuals to have several accounts under one set of login information, you might use internet banking to set up this programme digitally. This way, you know at a glance how much money you have at your fingertips to cover your monthly expenses, plus you do not need to keep track of various envelopes and cash.

Create cash buffers
The value of getting cash balances saved is illustrated in times of economic instability, as we have seen this year. If you haven’t already, measure how much money you will need to save to cover three, six or twelve months of living costs. Saving that much money may seem like a daunting challenge but chipping away at it every week will give you the opportunity to meet your expenses even if your circumstances change. The main advantage of doing so is that it will reduce tension and place you and your finances under less pressure.

Savings on automatic
Saving the money you have left at the end of each month can be tempting, but it doesn’t help you build up savings over time on a consistent basis. If your goal is to buy a home, start investing, update your couch or have a rainy-day fund, it’s powerful to automate a fixed sum per month to move to your savings account. Through setting up this automatic transaction, you set a benchmark for the amount that you will be saving each month. This may be an change at first, but it will become a second nature after some time.

When you’re looking for ways to improve your finances, these tips can provide a general starting point but are not intended as tailor-made financial advice. Be sure to talk to your accountant and a trained financial advisor to get some detailed input on your particular situation and start preparing your financial future.

Note this article is not a financial or legal advice. Please check with your financial and legal qualified advisors before making any decisions on your own.

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