With a firm grip of reality, the hardest part for so many would-be property investors is getting that deposit together, and it’s not easy is it!
Being told “you just need to save for it” really doesn’t help.
The number one reason most of us grownups don’t have a budget is because we don’t know how. We know why we need to have one but it gets pushed away because it’s all too hard.
So this episode we take a look over the simplest little budget plan you can use and you don’t need to buy any flashy apps, you don’t need a mass of Excel spreadsheet running kidding yourself that you are doing something.
The 50/30/20 budget is absolutely fabulous for budgeting beginners, as it gives you a nice easy to understand framework to work from. It also gives you the chance to reassess your own spending over time.
This simple to manage budget splits your monthly income into three categories needs, wants and savings and put them into three separate bank accounts.
Needs: Your needs are your everyday expenses and the essentials you need to live, such as food, rent, utilities, healthcare and transport costs. This also includes debt repayments, such as credit cards or loans.
Wants: Your wants are things that generally make your life more enjoyable, but are not necessities, such as phone bills, dining out, that morning coffee and other entertainment such as gigs, after-work cocktails and brunches.
Savings: Your savings include any and all savings you are setting aside, such as your emergency fund, extra repayments and goal savings.
The main benefit of the 50/30/20 rule is that it gives you the chance to reassess your spending, but still gives you the flexibility to do what you want to do. There are a number of reasons you can try the 50/30/20 budgeting rule in your day-to-day life, including.
The small decision of putting your money in its box’s each month will get you into a good long-term habit and break the cycle you were once in.
Will this fix everything for everyone?
The short answer – no. I can tell you that with 20+ years in finance, there is no magic money pill you can pop, you have to want to make a change and stick to it.
This is a great place to start, but the rules can be a bit too vague for some and although nobody is checking your numbers it’s easy to lie to yourself and fudge the figures.
The important thing is to get yourself into a routine of managing your money and then you can look at broadening your goals and building wealth.