Whether you are moving to Australia as an OFW or venturing out for tertiary studies, it can be difficult to switch a “party of one” financial mentality. One of the first financial steps to take is to set a realistic budget before and after moving alone.
Begin by analyzing the possibilities of different budget plans. Is your budget going to be stricter or looser after you move to Australia? Adjust your plan accordingly.
After moving in, evaluate the feasibility of your budget. Are you struggling to make ends meet after following your “new” monthly budget? Notice the red flags as these signify change. You may either increase your income streams or decrease your expenses depending on your situation.
Because everything is your responsibility, take these sensible steps to make a realistic budget:
1. Put Everything Into Account
Everything that you spent and will spend should be accounted for as tangible expenses. Look back at your past receipts, bank statements, and fixed purchases to track your spending for a month. Doing so will give you an idea on how to allocate your money.
This is why you must write down your transactions such whenever you receive a paycheck, a credit card bill, or an automatic bank deduction. Keep your data inside an Excel file or a budgeting software if you wish to.
Think of possible categories to cluster similar expenses. Categories include entertainment, rent, utilities, holiday presents, and so on.
2. Evaluate Your Spending Categories
Divide your expenses into appropriate spending categories and get the overall picture. Identify which category you spend most on by calculating its percentages. Here is an example of Dan’s budget:
The figure above shows that Dan spends so much money on Rent and Entertainment. It is probably best if he can adjust his spending on Entertainment to cater to broader allowances in Food and other categories. It is understandable to spend most on Rent as Dan is living on his own.
Some of the categories that you set will likely to be necessary expenditures (fixed), while others are non-essential expenditures (variable). If you are spending too much money on one or two categories then, you must set goals for these. Most financial experts agree that you must spend 50% on fixed expenses, 30% on variable expenses, and 20% on savings.
3. Track All Your Accounts
The only person that you can primarily count on is YOU! So, make it a habit to track all your accounts. Avoid penalties or even deportation staying prompt on your mortgages, credit card bills, and vehicle loans. Making these choices will not only keep you informed but also help you prevent overspending.
Use a budgeting software or a single file to aid your documentation throughout the month. Keep up with your bills and review which bills are due next through the same platform. I recommend the software Mint because it has a mobile app that you can take anywhere.
4. Plan for the Future
Because much of the future rests on your shoulders, you need to spend a substantial amount of time to secure your future as well as your family’s future. It is important to have rainy day savings or emergency fund. The emergency fund can help cushion unexpected expenses such as dental fees for your kid who needs braces.
Saving money on the basis of a single income is not always easy. This is where a robust budget plan comes into the rescue! Following the budget and employing efficient spending habits will let you take control of your finances.
Living on your own for the first time can be liberating. Privacy is definitely one of the top perks. But, budgeting for this lifestyle can be challenging. This is why you must set and stick to a realistic budget.