Budget planning can seem like a lot. But being organised with your money makes all the difference to your life, especially when unexpected (RE: forgotten) bills pop up, or you’re saving up for your first home, new car or dream holiday.
Whether you’re a total beginner or a spreadsheet boss, we’ve got budgeting tips and techniques to guide you in setting budget goals and sticking to them.
Ever heard of bucket budgeting?
Bucket budgeting is a modern version of envelope budgeting. When your parents got paid in the old days, they would put their cash in different envelopes to cover different expenses. One envelope might be labelled RENT, another would be labelled GROCERIES, and another might be labelled BILLS. Any money left over would then be stashed under the mattress for a rainy day.
Now enter the digital age, and instead of stashing cash in envelopes (not very secure), budgeting legends are stashing their cash in multiple transaction accounts like SpendME (more secure) with each account dedicated to a different expense such as rent or groceries. Any money left over can be deposited into a linked savings account, such as a SaveME savings account. Or for those saving towards a home deposit, extra funds could go into a HomeME savings account.
Here’s how you can give bucket budgeting a go:
Pick your bucket categories.
Now that you know what you’re spending and earning, your next step is deciding how many buckets you need and what they are. Here are some good examples:
Bills: rent or mortgage repayments, as well as utility bills and repaying any debts.
Everyday: to cover things like groceries, public transport and petrol, etc.
Spend: anything from catching the latest Marvel movie, to date night, or even those shoes you’ve been eyeing up.
Savings: this bucket will cover any emergencies and also things you’re saving up for. It could be a family trip to Europe, your first house, or a new set of wheels. While the other buckets are for regular transactions, your savings should go untouched most of the time, so it’s worth using a high interest savings account like SaveME.
Open a transaction account for each money bucket, a savings account for your savings and emergency buckets (and a home loan savings account for your deposit if you’re saving for one). Don’t forget ME has five different coloured cards supporting different charities when you use your digital wallet, making it even easier to stick to your budget, but also do some good.
Split your income amongst the buckets.
A good rule of thumb is that rent or housing and bills will take up to 50 per cent of your total income will be taken up by rent or housing, utilities, and groceries and other bills; 30 per cent should cover splurges; and 20 per cent should go towards your savings.
But remember – once the money is gone from one of your buckets, you can’t borrow it from another. So, you might have to wait until next fortnight, when your bucket’s full again before you buy that new pair of New Balance 530s.
How to get the most out of bucket budgeting.
1. Plan you spending in advance.
Nothing is worse for your budget than impulse buying. Taking money from your bills bucket as a cash advance for that festival ticket? Big no no.
Bucket budgeting will only work when you plan spending ahead of time wherever you can. There’s little tricks to help you do this on the daily. Going to the supermarket? Take a list and stick to it. Or better yet, do your grocery shopping online, so you can track the dollar amount and not be tempted by the choccy aisle. Going on holidays? Set a daily spending limit, you can make it fun by trying to find the best bargain lunch. Pace yourself by spacing out dinners or events with friends and family. This will help curb the splurge while giving you time to replenish your social batteries and bank account balance.
2. It’s okay to say no.
While bucket budgeting is there to help you achieve balance in your budget and life, if you’re saving for something big, it’s absolutely okay to say no to plans. Be honest with friends and family about your financial goals. Embrace those moments when you choose to take a break, indulge in self-care and enjoy your own company. Remember, it’s all about doing what feels right for you!
3. Hit unsubscribe.
If you've found yourself accumulating a growing list of subscriptions, it's time for a little spring cleaning! Take a moment to evaluate which ones are truly essential, and which ones you won't be fitting into your bucket budgeting plan. Whether it's workout apps, meal subscriptions, or multiple streaming services, be proactive and cancel the ones you no longer need.
4. Save money on your biggest spending categories.
Trawling through the biggest spending categories in your budget can be a great way to find opportunities to save.
Set yourself a budget goal to cut spending in two or three categories like weekly groceries, transport, hobbies, clothing or entertainment. Review your budget regularly to track your progress. You might even make a game of it. If you cut your spending by 5 per cent, try cutting it even more next time. Success is its own reward – and it costs nothing.
Start bucket budgeting with SaveME.
Get access to our high interest savings account with no monthly fees, transaction accounts with five coloured cards that support five different charities, and a dedicated home loan deposit account. Now that sounds good to ME.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.