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How to evaluate your finances and create a budget
April 13, 2011
Whether you're trying to get a foot on the property ladder for the first time or would simply like to shave a little time off the life of your home loan by making extra repayments, you first need to take a good, hard look at your finances. The key here is to manage your money not have your money manage you. A little belt tightening is going to be unavoidable but it doesn't mean you have to entirely sacrifice your standard of living. Just spend wisely and manage what you have.
First and foremost, you need to create a budget.
- List all your monthly income and expenses including debt repayments and deposit savings.
- Allow for saving some money each month for emergencies, eg: doctor bills, car repairs and unknown expenses.
- Most budgets will have categories for everything from haircuts to car registration to help make sure you don't leave anything out.
- Subtract your expense total from your income; you'll either be left with a surplus or negative. If it’s the latter, it's definitely time to cut back.
Go to Understanding Money for great, free resources to help get you started including an easy to follow guide on budgeting, along with a downloadable Microsoft Excel budget planner, which can be in printed.
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