If your budget suddenly feels tighter, you’re not imagining it: here’s what to do next
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With interest rates, petrol prices, insurance bills and most other household expenses on the rise, you might feel like your household budget is running a step behind. You’re not imagining it and you’re not alone.
The good news is there are things you can actually do, today, to take some pressure off.
George Collie, Principal Adviser with Panorama Wealth in Dickson shares some not magic, not get-rich-quick, practical moves he’s seen work for Canberra households.
Get a real picture of where your money’s actually going
Most people have a rough idea of their spending, but actually tracking where every dollar goes can be incredibly beneficial. Here are a couple of ways to do this:
- Some banking apps will automatically track your expenses and build you a summary with graphs.
- You could download the CSV and manually categorise and track your expenses. You could even upload the CSV into ChatGPT, Claude, Gemini or another AI provider to categorise and analyse your spending habits.
- There are software providers, e.g. PocketSmith, that set up data feeds to your bank accounts and track your expenses this way. If you’re a small business owner, and comfortable with Xero, you could get your accountant to set up a non-GST cashbook to track not only your income and expenses, but your assets and liabilities as well.
Set and maintain a cash buffer in the bank
Some households pay for their expenses on a credit card and then clear it when they get paid, with little to no cash buffer in the bank. This can be quite risky, as it often doesn’t allow for emergency expenses.
If this describes you, it might be worth trying to gradually build a cash buffer in the bank (ideally an offset account if you have a mortgage), then once you have three months’ wages in the bank, consider getting rid of the credit card altogether.
Deal with the debt that isn’t working for you
Some debt helps you get ahead, such as debt on well-performing appreciating assets, and some debt holds you back, such as car loans, personal loans for holidays and paying credit card interest past the typical 55-day interest-free period.
It can be a good idea to avoid the latter, because not only can those debts be detrimental to cashflow and wealth creation, but often they also remove the psychological opportunity cost decision of spending that money.
This article contains general information only and does not take into account your personal objectives, financial situation or needs. Before acting on any of it, consider whether it’s appropriate for you, or speak to a licensed financial adviser.
