A budget can save you in more ways than one

I wrote yesterday about how you should include things you want in a budget to ensure you stick to it, but I know that that sounds unlikely to anyone that doesn’t use them. Basically a budget just means (at the very least) knowing what you’re going to spend your money on before you get it. The other side of that equation is knowing where your money is coming from and how much it will be. A personal finance book I once read captured the issue of financial organisation perfectly for me when it pointed out that every company in the world – know matter how profitable – has to have a budget. It correlates that most of the people in the world who have real personal wealth – I mean the Warren Buffets and Rupert Murdochs of the world – have a budget of some kind. Granted theirs would look a little different to mine 🙂 but it can be comforting to keep this in mind. The other thing is that anyone who goes to the teller on payday and grabs $150 for a takeaway,  cigarettes and groceries still has a budget … it’s just not a planned one.

The goal of a budget should always be to get the things you want! The surprising thing is that sometimes it can be tricky to know what that is.  For example, I recently started lusting after an LCD TV. I wanted a nice slimline TV to go on the wall to create more space in our bedroom (so I wouldn’t keep hitting my hip in the gap between the bed end and the TV cabinet. Then, once I started looking at a slimline TVs (about $600 AUS), I start thinking it would be silly to get one that doesn’t have an inbuilt high definition tuner. These START at $1400 but then you need to pay to get it attached to the wall etc etc. So I started working my budget to afford that TV. Once upon a time, if there was room on my CC, I would have just bought it and started the repayment cycle. The interesting thing is that about 3 weeks after I came up with my grand plan, I realised I didn’t really want a HDTV after all. In fact, I was willing to put up with the crappy TV we’ve got for as long as possible. That’s because my husband and I decided we really needed and wanted to save for our own home. The thing I realised later was, if we’d gone out and bought that TV on credit, we’d be $1400 further away from putting away savings for our home. And that’s the problem with credit … the things you want, you often can’t afford because of the debt already hanging over your head.

So, the upshot is that we have put our first $250 into savings for a home in our first week of trying. We saved $150 from our salary/s, put $50 worth of coins in the bank and found $50 from interest we made in a high yield account over the past year. I am so glad we didn’t buy that TV!

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