Navigating the Cost of Living Crisis: Easy Steps to Start Budgeting Your Income

When living costs spiral upwards faster than our incomes, we encounter what is commonly known as a ‘Cost of Living Crisis.’ The daily strain of making ends meet can be daunting, but with the right strategies, we can navigate these turbulent waters. Budgeting is one of those critical strategies.
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What is Budgeting?

At its core, budgeting is about understanding your income and expenses. It helps us plan our spending, save money, and make informed decisions about our finances.

How to Start Budgeting

Track Your Income and Expenses:

The first step to budgeting is knowing where your money comes from and where it goes. Keep a record of your monthly income and all expenses, however small.

Categorize Your Spending:

Once you have a list of your expenses, group them into categories like rent, groceries, utilities, entertainment, insurance, and so on.

Set Spending Limits:

Based on your income and necessary expenses, set spending limits for each category. Remember, the goal is to spend less than you earn.

Stick to Your Budget:

This can be the hardest part. Try to stay within the limits you’ve set. If you overspend in one category, adjust the spending in another to compensate.

Regularly Review and Adjust Your Budget:

As your income, expenses, and financial goals change, so should your budget. Review it regularly to ensure it’s still serving you.

Considerations for Insurance Premiums

Insurance is a crucial part of financial planning. It’s an expense we pay now to protect ourselves from potential future financial losses. However, insurance premiums can feel like a heavy burden during a cost of living crisis.

So, how can we manage this? Consider the concept of ‘excess.’ An excess is the amount you agree to pay out of pocket when you make an insurance claim. By choosing a higher excess, you can reduce your regular insurance premiums.

While this means you’ll pay more if you need to make a claim, it can make your premiums more affordable in the short term. It’s a balancing act of risk and reward, and it’s essential to consider your financial situation carefully.

Conclusion

Surviving a cost-of-living crisis involves strategic financial decisions, and budgeting is an excellent place to start. Stay tuned to our series as we explore more strategies to navigate this challenging period.

Remember, in a crisis. The goal isn’t just to survive but to thrive. Together, we can do this.

The information in this article is general in nature as it has been prepared without taking account of your objectives, financial situation or needs. You should consider the relevant Product Disclosure Statement (PDS) & Target Market Determination, and obtain appropriate financial and taxation advice, before making a decision about whether ExtrasJar’s products are right for you. 

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