Alright 2020, that’s enough now. Seriously, you’re toying with us like a Tinder date who views our Instagram Story but still hasn’t text us back. At Urban List, we want to help you get on top of your finances even in difficult times, which is why we are here to help you improve your money mindset with ANZ’s sponsorship. The Financial Wellbeing Bootcamp brought to you by ANZ is inspired by their four-step wellbeing check-in, and loaded with helpful hints and techniques which could have you managing money like a pro.
Strap yourself in for the first step of achieving financial wellbeing, planning your budget. Here, we’re unpacking how to use the 50-30-20 technique and how to review your budget in the future.
Fudge It, Let’s Budget
Budgeting doesn’t need to be a boring word. With the right planning, a budget can actually mean you have more of everything you want in your life. A percentage-based budget like the one we’re showing you today is a fool-proof way to ensure you’re hitting all your goals, and living life while you do it. The ANZ Budget Planner is a handy tool that can help you map out each of your categories.
The 50/30/20 Budget
The 50/30/20 budget takes your wants and needs categories and puts them to work in a percentage-based budget that expands with your finances.
● 50% of your income goes to needs
● 30% of your income goes to wants
● 20% of your income goes towards your savings goals
The benefit of this style of budgeting is that it works on percentages, helping to limit lifestyle creep and ensure your savings increase with your income. No matter how much you earn, you’re still allocating the same proportions to needs, wants and goals.
Using The 50/30/20 Budget
To get started with the 50/30/20 budget, you need to plug in your numbers.
Let’s say your weekly income is $1000.
That means you’d allocate $500 to needs. Housing, debts (credit card, personal loan, etc), food, utilities, public transport, petrol, medication, etc.
Next, you’ve got $300 for wants. Socialising, subscriptions, treating yo’self—that sort of thing.
Finally, $200 goes straight towards your savings goals. Whether that’s towards buying a property, going traveling (ahem, one of these days), or buying a new laptop to play the sims.
Set Up Your Accounts And Go Automated
Once you’ve got your allocations sorted, it’s time to get your accounts set up.
Some people find it helpful to open different accounts for their needs, wants and goals.
When choosing an account, look carefully at the features, benefits and limitations of each account, in order to choose the one that is right for you. For example, some accounts give you easy access to your money for regular transactions. Savings accounts tend to reward you for leaving your savings alone.
Remember to check for things like fees and charges, restrictions on accessing your funds, and the interest rate that will apply to your savings. Some accounts will give you bonus interest if you deposit a certain amount each month, for example.
Then, it’s time to automate. Check whether your account allows you to set up a regular transfer for every payday, that sends your money straight into your needs/wants/savings buckets. You may also find it useful to switch all your bills to your needs account, so you always know they’re accounted for with your needs allocation. Alternatively, you can set up a separate bills account where all your direct debits come from.
Tweaking Your Budget
Plugged in your numbers and found that 50% isn’t enough for needs? Perhaps 20% savings is a bit of a stretch right now. Fear not.
The beauty of the 50/30/20 budget is that you can switch those numbers up to suit your lifestyle and goals. Working reduced hours right now? Cut that wants percentage and allocate more to needs. Going ham on savings to buy your first home while living with the folks? Scale back the wants and needs percentages and stack more into your savings portion.
A spend tracker that’s linked to your transaction account will be your secret weapon here. A spend tracker can be a handy tool that can allow you to set spending limits on your accounts in your banking app, and then pull up your daily spending to review at a glance. Make it a habit to check in with your tracker and see where your money is really going. Setting a budget is step one, sticking to it is step two.
Setting up a budget that works for you can make managing your money a set-and-forget task. Playing the long game with your percentage-based budget could help you to stash savings with seemingly little effort, while still enjoying all your wants and serving all your needs. Now that’s budgeting we can get on board with.
Stay tuned for next week’s Financial Wellbeing Bootcamp, brought to you by ANZ, where we’ll show you how to reduce your expenses to free up cash for things that you really love.
Is the serial spender in you struggling to make way for savings? Head here to learn how to tackle splitting wants from needs which could help you to stash away serious cash.
Editor’s note: This article has been written and published by Urban List, and is sponsored by ANZ. Unless otherwise stated, all views and opinions belong to Urban List. Thank you for supporting the sponsors who make Urban List possible. Click here for more information on our editorial policy.