Make your money work as hard as you do

by Carmel McCartin, Budget Bitch.

Ask most people if they work hard, and they’ll probably say that they do. Ask them if their money works just as hard and most won’t be able to answer that nor will they even know where to start.

So how do you make your money work as hard as you do? Well, I’m sure you’ll have an idea as to what my answer will be. Yep, the first step is to have a budget and you’ve just got to get it right.

Somebody asked me the other week “what is the perfect budget?”

That’s an excellent question and there really is no right or wrong answer. Just like the fact that we’re individuals and we’re all different, so too are our hopes and dreams, our lifestyles, priorities and our needs and wants.

So, what might be the perfect budget for one person might not necessarily work for somebody else. Even though we might work at the same place as our friend, and earn the same money each week, because our home lives are very different so too will our budgets be different.

There are many factors to consider in a budget: how much debt do I have? How much are my weekly, monthly and annual bills? How much income do we receive each week? What are our financial priorities? What savings would we like to put aside for the future? What will our needs be within a year? In five years time? In a decade?

Possibly the biggest question we must ask ourselves is this: do we have enough income to sustain the life we’re leading now and into the future? Sadly for so many of us, we don’t have an income problem but a spending problem.

Sometimes I think it’s just not possible to even earn enough money to buy everything that you want!

The perfect budget is like a diamond and has many facets. It has a portion to repay our debt as soon as possible, without choking the finances. There’s also a portion for day to day bills which enables us to pay these accounts on time without stress.

There is also a part that puts a little aside for ‘rainy days’. So many of us have no savings and therefore have to borrow money for the times when disaster strikes.

And, of course, there’s another section for fun – for having things we’d like, things to make us feel good. That’s important. The perfect budget doesn’t need to be too restrictive all the time.

Each part is in direct proportion to the household income and the needs of its occupants. It needs to be balanced so that each portion of the budget is fair to the other parts.

Of course, the budget we have today won’t be relevant forever. It can’t be. Just as we find our life continually changing, so too will our needs and wants. Our budget will need to be adjusted in accordance.

And just as our life changes, so too does our expenditure. No two months are ever the same and sometimes there are things that happen which require us to spend more money than we’d like. In a perfect world, these things wouldn’t occur. In a perfect budget there’s enough money put aside to, at least, alleviate some of the stress without reaching for borrowed money all the time.

Finding the perfect budget for your family doesn’t happen overnight. It takes some planning, and then some test-runs to make sure the perfect mix of spending and saving are in the right proportions. It needs time and patience to get it right for you and your family.

You have to remember that it’s ‘a work in progress’. There’s no sense in starting and then giving up in less than a week. That’s not giving you or your money a chance to have a financially secure future.

So how do you find this ‘perfect budget’?  Well, the first step is to start working on it!

Carmel McCartin is known as The Budget Bitch.  She specialises in Personal Budget Planning, Budget Coaching and Budget Education enterprise.

Carmel writes for the Border Mail Newspaper and is the author of “Money Tips from the Budget Bitch”