personal finance mindmap

It can be tricky to be an adult, especially if you love to shop and are not good with numbers. 

There is so much to do, and so many things that can be seen across the country, and all of it costs money. 

Many of us are guilty of falling into the trap of living beyond our means at some point in our lives. 

It can sometimes seem to be impossible to climb out of debt. 

Make the effort to learn the following useful tips on how to best manage your personal finances, to allow you to not fall victim to the money trap and enjoy life within your means. 

Here are some tips to help you control your finances instead of letting them control you! 

Debt Statistics for Australia 

The most recent census, from the ABS report on wealth and household income, states that 75% of households in Australia are in debt, and 55% indicated that the main culprit was credit cards. 

Compared to the 2003-2004 time period, the average debt across Australian households has increased by 79%, while at the same time, average income has increased by only 38%. 

This is a big gap and continues placing a great deal of pressure on families in Australia. Inflation has more recently increased by 9.7% since the 2013 election compared to a 7.8% increase in household income. That equates to a 1.7% decrease in the standard of living. 

The 79% increase in debt was driven primarily by property debt that makes up 56% of total Australian household debt. Entering into the property market can help to build wealth and secure the future for families. 

However, one disturbing statistic shows that 27% (one in four) households liabilities that were equal to three years or more worth of disposable income – which means that they are classified as being over-indebted.

Since numbers do not lie, it can be difficult to stay on top of expenses with the cost of living continuing to rise, without earnings keeping pace, so what should we do about this? 

According to the rehabilitation experts at Gold Coast Detox, mismanaged finances are often a contribution driving people to poor life decisions. “Money troubles are a very common reason people are drawn towards drug and alcohol addiction. By trying to be on top of your personal finances, you will reduce the possibility of this becoming a stress point in your life and allow you to stay in control.”

So what can you do to get ahead?

Tip #1 – Keep Track Of Your Spending 

Where does your money actually go every day? Before you can determine the best way to effectively manage your finances, first you need to clearly understand what your current spending patterns are. 

You may be surprised when you start tracking your spending, all the money that can fly out the door on certain items than you may have estimated. 

Travel and work expenses, lunches, coffees, all add up and those ‘smaller’ purchases may be hard to track. 

Thoroughly track your spending for one month to get a clearer picture of your personal spending habits. You will then have an accurate financial overview to create your budget from.

Tip #2 – Develop a Budget 

someone writing out their personal budget

Getting a budget set up can help you organise your finances and remind you how much you can spend as well as future expenses that need to be planned for. 

Note all of your streams of income (income from your job, rent assistance, supplements, allowances, etc.) 

Note all of your expenses (health insurance, home insurance, clothing, food and drink, car repayments, mortgage or rent, utilities, bills, etc.)

If you have any large bills that are either charged quarterly, bi-annually or annually, it is good to break the total amount into smaller sums to save over the months or weeks before the bill is due. 

It will depend on the amount that you can afford to save every week.

Try to factor in some savings into your budget for unexpected expenses, and save money for a fun weekend or a trip. 

Tip #3 – Pay Your Debts Off As Soon As Possible 

It can be hard to keep credit cards under control once they are introduced into your life. It is never a great idea to use a credit card to pay for items or bills you cannot afford already. 

You need to be sure that you can consolidate whatever you spend on the credit card before the due date on your minimum payment in order to keep interest charges and fees under control, or manageable, at least. 

Tip #4 – Use Technology

personal budget notes and desktop computer

For the financial experts at Business First Technologies, “Most small businesses owners are desperately trying to balance their time between servicing their customers, and undertaking the administrative tasks required to keep the business running smoothly.” This can make it tough to stay on top of budgeting if you’re already dealing with a busy schedule.

In short – it can be tough to get out of debt when you are struggling with the bottom line. 

There are numerous finance and savings apps that can help you get set up and achieve your goals faster. 

Those tools also can help you recover faster when you fall behind, and help you plan for the future by setting reasonable expectations and targets.  

A major cause of stress is poorly managed finances. After you get this important aspect of life working for you instead of against you, your life will be much easier and your future will seem much brighter. 

Tip #5 – Make Sure to Plan Some Fun Too

It isn’t necessary for good money management to kill all of your fun or feel like a huge sacrifice. 

In fact, it is the opposite. After you get used to being aware of the way you spend your hard-earned money you will finally be able to plan for and budget a future that puts much less pressure on your finances. 

According to the home improvement experts at Homestyle Flooring Solutions, having a budget allows you to plan for big-ticket items. “Things like a home renovation is an expensive project and are ultimately an investment. This means that it’s something sensible to save for because it is worth it but can only be achieved if you get organised with your personal finances.”

Being on top of your personal budget could even help you buy your first home.

If you need further assistance with managing your finances, consult with a professional. 

A good financial advisor can definitely more than pay for themselves through all of the savings they can help you achieve.