Where does my money go?
Posted on 09/07/2018
On average, an Australian household spends approximately $1,425 a week on general household costs1. However, it is often not just the important things like rent, mortgage, groceries and transport incurring these costs, but the little expenses that add up.
These little expenses include things like coffee, takeaway food and unnecessary fee and charges from ‘set and forget debits’. These can add up and leave us wondering what happened to our hard earned money.
The following are some tips that may help you answer this question.
Keep track of every dollar you spend
It is important to keep receipts from every purchase that you make and then record them into your notebook, spreadsheet or app. Once you have visibility of your spending, you can recognise where you’re paying unnecessary fees and charges, such as a gym membership or a home phone line that you don’t use very often and are paying too much for. Additionally, it can be beneficial to contact your energy, internet, credit card and mobile providers to negotiate a better deal.
Change your spending habits
Once you have identified where your money is being spent, you can take action:
Determine how much you are spending on unnecessary things. Then you can set yourself a daily limit as to what you’d like to spend and then try not to go over it.
Only buy the essentials when grocery shopping, so you don’t waste food and money.
Look out for discounts and offers on the back of your shopping receipts.
Make an effort to cook homemade meals instead of ordering take away.
Don’t make shopping a pastime – try reading or going for a walk instead.
Instead of buying books, DVDs and games try borrowing them instead.
You’re more likely to keep track of where your money is going if you are aware of how much you are spending on these purchases.
Create a budget
A budget is an extremely useful tool if you want to keep track of your purchases and determine how much you can afford to save for expenses such as school fees, home renovations or holidays.
Have an emergency savings plan
Knowing where your money is going can make it easier to justify putting aside money for emergencies or unexpected events.
Having an emergency fund can give you peace of mind and reduced your reliance on taking out high-interest borrowing options, such as credit cards or applying for payday loans, which can often be costly forms of finance and create unnecessary debt.
1 Australian Bureau of Statistics, Household Expenditure Survey, Australia: Summary of Results, 2015-16
General Advice Disclosure: This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.