Going through a budget slip is less than ideal. While most of us love to budget for holidays, saving up for that first property or investing in shares, the inevitable can happen and next thing you know, you’re dipping into your savings just to hold you over until the next pay day.
According to an article published on Northern Star
last year, it described Australians as “financially-challenged”
when it comes to adopting better money management habits. It was found on the latest consumer index by BT Financial Group that:
- 21% of people have no savings
- 23% have at least one month of savings
- 56% have more than one month in savings
The overall consensus is that 1 in 5 Australians
don’t have any cash savings to fall back on, and this can be a stressful case for people that are on a part-time income living paycheque-to-paycheque
No matter your financial circumstances, it’s possible to still kick-start your savings. Obviously, with some discipline and slight changes to your spending habits
, it’s possible to bounce back from a budget slip and work towards a financial goal - whether that be for travel or simply building an emergency fund
Check out the steps below and see how you can restart again when you have a budget slip.
What to do when you have a budget slip
- Start a money challenge.
- Use cash when you spend.
- Have a spending plan.
1. Start a money challenge.
Money challenges are fun and can be a great way to motivate you to start small until you get comfortable with saving. Since they are meant to encourage you to stick to a set plan, it can help you perceive saving as less of a chore and more of a fun game
. One of the benefits of following a money challenge is it can help you feel encouraged putting away small amounts of money. In hindsight, it feels achievable when it is just small increments of money.
Here are some challenges you may want to undertake:
$5 dollar note challenge
This hack was started by Marie Franklin, an American journalism professor, who started the $5 dollar challenge 13 years ago and is still continuing. By doing this challenge
, she has saved over $50,000
by simply putting away each $5 dollar note she receives. While millennials are moving towards a “cashless society”
, this hack may encourage you to start using cash. It’s a simple challenge where each time you receive a $5 note from spending, save it into a jar and deposit the money at the end of the month. You’ll be surprised by how many notes you can stack up.
$2 Coke bottle challenge
If you’ve seen this one making the rounds on social media, you’re not wrong. This challenge
works great if you’re strapped for cash or simply feel that you aren’t too good with saving. By simply starting with an empty 600ml coke bottle, you can see yourself save up to $880 when filled with $2 coins. Similarly, a 1 litre empty coke bottle can reach a potential savings of $1500. Something as simple as $2 can help you save, even if it’s only a small amount. It can still add up and help boost your savings.
The Grandpa challenge
With the growing demand of eating out and having Uber Eats installed on your app, it’s easier to order food without leaving the house. This can be dangerous grounds for people, especially those who tend to “splurge” on food without thinking. It’s much easier to blow your budget on food when you have easy access to apps that make food delivery easy
. Sometimes, we forget the simplicity of how our grandparents spent their time, as blowing out money at a fancy brunch place or restaurant was an unlikely scenario for them.
Emma Edwards is a financial lifestyle blogger at The Broke Generation
and this year, she came up with a challenge of her own called “The Grandpa Challenge”
. It is a point-based system challenge where it encourages you to do activities that require little to no money (like Grandpa) and earn points from them.
These include entertain at home, cooking a meal from scratch, reading a book or more. There are rules she has implemented too, such as no soft drinks, shopping or convenience foods, and for each rule broken, 5 points are deducted from your score. This is an excellent idea for people looking for ways to save money but also want to do a fun activity that doesn’t break the bank.
2. Use cash when you spend.
There are certainly many pros when it comes to using cash for your daily expenses. According to research
, it’s more painful to part ways with cash than tapping with your credit or debit card. It’s the notion of mindless spending that comes in the digital realm and can put you into the trap of overspending if you’re not careful. There are plenty of pros using cash
and this can help you bounce back from your budget slip by simply switching payment methods:
- No hidden fees: there is no surprise that there are restaurants out there that charge 1.1% transaction fees when paying for your meal but when paying with cash, you can save a few dollars by simply handing over $50, instead of losing $50 and a couple of dollars on transaction fees.
- Helps reduce impulse spending: when you have cash in your wallet, you’re more inclined to stick to a budget than spending with a debit or credit card. It also encourages you to rethink your purchase before you decide to buy something.
- Accurate budgeting: you may have read some success stories on people using the envelope budgeting system, and you wonder how these people can clear their debt and have a healthy savings into their account. The simple truth is that these individuals stick to their budget and once the cash is all used up, they move on until the next payday. While cash has its drawbacks (lack of security, inability to track purchases, etc), using it can help you be more disciplined and get back on track from a budget slip because you’re living within your means and avoid the temptation of overspending with a credit or debit card.
3. Have a spending plan.
Glen James is a co-host of the financial podcast My Millennial Money
and he speaks about the hot topics of the finance world such as rent-vesting, moving out of home or how much to spend on a car. He is also a financial advisor and owns a blog called sort your money out.
On the podcast, he talks about having a spending plan and how important it is to have one and encourages listeners to have an automated system so it comes to them naturally. Last year, James wrote a piece titled, “The personal finance habits of successful people”
, offering some handy tips for those wanting to improve their daily habits with money:
- Keep educated: having good financial habits starts with research. By reading self-help financial books or listening to finance-focused podcasts can help you be more aware about your spending habits and avoid dangerous spending. By learning more about money and how to effectively use it can do wonders. It also helps you be in a better mindset of giving your spending and saving purpose, rather than doing it “just because”. Keeping informed is the only way that can help you become a better saver, and avoid the regular budget slip.
- Think about future you: when you think long-term about what you want, it can encourage you to save when you have a goal in mind. Whether you want to go on a working holiday to cover living expenses, or simply want to settle and buy your own first home, it’s important to set some long-term goals for yourself and review them regularly to see if they are relevant. It’s important to think about what could happen in the long run and how this will affect future you.
- Avoid having consumer debt: if you have a car loan or maxed out credit card, these can hold you back from saving money. If you already have existing consumer debt, do your best to pay off more than the minimum payments required so you are closer to being debt-free and avoid losing more money on interest.
- Automate your expenses and savings: from direct debits to knowing how much money you need to “splurge” can help you automate your expenses and savings. By putting everything on autopilot, this can avoid overspending. If you are using a credit card to pay for your bills, it’s best to stick to a credit limit you know you can afford to pay off each month and avoid having an extra “buffer” on it and build an emergency fund in lieu of this.
Interested in helping others with their financial matters?
If you have the desire to help other people get out of debt and avoid budget slips, check out Upskilled’s courses in finance. These qualifications are nationally recognised
and designed to be completed within 12 months. Depending on your interests, you have the option of studying financial planning
or mortgage broking management
. If you like the flexibility of online learning, get in touch with an education consultant to talk about your career goals in finance today.
This article should not be taken as expert financial advice. Please consult a financial specialist for further advice on your circumstances.