Interest rates are rising, and the cost of living is causing considerable strain on many household budgets. Therefore, there is no better time than the present to audit your expenditure and ensure your budget is maximising your cashflow so your financial goals remain in reach.

To help mitigate the rising cost of living, we have compiled a list of Budgeting Mistakes many mortgage holders make and how to overcome them and be a Budgeting Boss.

Budgeting Mistake One: Not Having One

By neglecting to put a clear plan in place to manage your finances you are essentially setting yourself up to fail right out of the gate. Instead, commit to making a well thought out budget and stick to it with the view to reaching attainable financial goals. If you don’t know where to start, there are plenty of online resources such as Moneysmart.gov.au that offer real tips on making and managing a household budget.

Budgeting Mistake Two: Not Being Realistic About Your Expenses

There is no value in creating a budget that is not based on a true reflection of your outgoings. Take the time confirm what you spend on both your set living expenses as well as your discretionary expenses such as recreation and entertainment and don’t commit to cutting back in areas if you are unlikely to follow through. In our experience, few people truly have an accurate idea of what they spend on day-to-day items so going over your bank statements can be an excellent starting point to determine where your money is going.

Budgeting Mistake Three: Failing To Budget For Savings

One of the primary motivators for preparing a budget is to help grow savings. However, it should not simply be a case of whatever left over after expenses should be the arbitrary savings amount. Instead, an actual savings goal should be determined so there is a certain level of accountability. Saving money shouldn’t be considered a passive activity it doesn’t just happen. Being actively involved in saving is the best way to ensure your nest egg grows.

Budgeting Mistake Four: Forgetting Non-Monthly Expenses

It’s easy to account for the regularly occurring expenses like your mobile phone, insurances, utilities and the like that are usually payable if not monthly then quarterly and are usually front of mind when creating a budget. But it’s the infrequent expenses that can get often overlooked such as vehicle maintenance, school fees, pet care, hobbies, and special occasion expenses such as birthdays and celebrations. Not all regular recurring expenses are frequent or obvious.

Budgeting Mistake Five: Not Allowing For Emergencies

Having an emergency or contingency fund is imperative as there are always unexpected expenses. Whether it be for vehicle repairs, home maintenance, appliance upgrades and even medical expenses its unrealistic to assume there won’t be some expense that is not planned for. Setting aside a contingency fund will mean your savings most likely will remain unaffected in the case of emergency.

Budgeting Mistake Six: Not Negotiating A Better Deal

Reviewing your outgoings also means reviewing where you can save and trimming some fat. Approach your service providers and ask for a discount and if their best offer doesn’t match a competitor then move your business. Can you get a better deal on your insurances, or utilities and do you really need all the streaming services you have? Of course, this can also be said for your home loan. Make sure you speak to your mortgage broker and see what discount they can procure from your lender and if it doesn’t stack up to the rest of the market, a refinance may be a viable option.

It doesn’t have to be an overwhelming undertaking to set up an effective budget and manage your finances better.  With interest rates rising and the cost of living at an all-time high its now more than ever important to be on top of your money management. Your Blackburne Mortgage Broking team can coach you on what strategies may potentially work for you if you are not sure where to start because securing your financial future starts now.