Money management. It sounds complex, right? Like some secret code only financial wizards can decipher. But the truth is, it’s a skill anyone can master. It’s about unlocking the ability to save more, spend wisely, and build the life you want.
We’re here to break down the barriers and get you excited about taking control of your finances. Let’s start by demystifying three fundamental terms: Income, Expenses, and Savings.
Income – Simply put is money coming in
The Fuel for Your Financial Engine
Simply put, income is the money flowing in. Your salary, commissions, bonuses, rental income – it all counts. This is the starting point of your budget.
Remember, your income is a valuable asset. Protecting it is crucial for your financial security and your family’s well-being. Consider exploring income protection insurance options.
If your income fluctuates, like with commission-based work, don’t let that deter you. See it as a challenge to be flexible and adaptable with your budget. The beauty of a good money management plan is its ability to adjust as your circumstances change.
This is a rule of thumb, a guide of sorts. Depending on your age, dependants and earnings this diagram will change.
Expenses: Where Your Money Goes
Expenses are the money flowing out. Groceries, utilities, subscriptions, unexpected repairs – anything that maintains your lifestyle falls into this category.
We’ll be diving deeper into the different types of expenses (fixed, variable, and fixed-variable) in our next blog post, and how to effectively categorize your spending.
Savings: Investing in Your Future Self
Savings are the portion of your income you set aside at the beginning of each month for future goals. We emphasize “at the beginning” because waiting until the end of the month rarely works.
Think of savings as investing in your future self. Break down your savings goals into short-term, medium-term, and long-term categories. This provides clarity and helps you understand how much you need to save and the timeframe you have.
A Powerful Tip: Divide and conquer! Calculate the total amount you need for a goal and divide it by the number of months you have. Automate your savings by setting up a monthly debit order into a separate account or exploring unit trusts.
Unit Trusts: A Smart Savings Vehicle
Unit trusts can be a great way to grow your savings. While the process is straightforward, consulting an independent financial planner is highly recommended. They can help you navigate the options and avoid potential pitfalls.
At Approach Administration, our initial meeting is complimentary, and we prioritize ensuring you’re fully informed before making any decisions.
What’s Next?
Ready to take control of your finances? Contact us today, and let’s start building a brighter financial future together.
Live. Trust. Grow. Matter.
