Why auditing your spending is important and how to start
Auditing your spending is crucial to understand where your money is going, identifying areas where you can cut costs, and make informed decisions about your finances.
Here’s some tips to get you started.
- Main account: Deposit all household income into one main account. Pay regular expenses from this account via direct debit or automatic payment right after payday. Leave only enough for groceries and fuel, as all other expenses will be covered or transferred to separate accounts.
- Regularly auditing your spending can lead to significant savings. Start small, focus on one expense at a time, and gradually expand your efforts. Identify one discretionary expense that bothers you the most, like entertainment. Decide where and how much to cut back. Once that’s under control, focus on another expense, like eating out.
- Non-regular expenses: Estimate the annual cost, divide by your pay frequency, and set aside that amount each pay. This includes house maintenance, school costs, car expenses, clothing, haircuts, entertainment, takeaways, gifts, etc. Create separate accounts for each and label them in your internet banking.
- Final step: Ensure your budget shows a surplus. Use the surplus to pay off debts first. Once debts are cleared, create a rainy-day fund by redirecting those payments until you have enough to cover 3 months of household expenses for emergencies.
This information is of a general nature and is not intended as personalised financial advice. RIVAL Wealth is a Financial Advice Provider (FAP) licenced by the Financial Markets Authority to provide financial advice. Our disclosure document is located at rivalwealth.co.nz or a written copy is available on request
