Top 3 Budgeting Tips for Renters in 2021
Renting can be an overwhelming experience if not planned for and managed properly. But if you know how to budget and keep track of your finances, the sense of accomplishment and freedom is worth the effort.
It might take a little time to figure out what works for you when creating and sticking to your budget, but fret not - there’s a basic formula to follow. We provide you three easy budgeting tips to kickstart.
Figure Out Your Household Income
Whether you’re living solo off of one income, joining pay cheques with your partner or dividing expenses with housemates, the first thing you will want to do is work out your household income.
Your household income may include your pay cheque from work, investments and government allowances. Once you have organised and worked out your monthly income, you can start taking the next steps in planning your budget and deducting the necessary expenses.
Workout Necessary Expenses
From your household income, put aside money for the necessities you will need to pay each month, including your rent of course. Even though it differs for everyone, necessary expenses can include the following:
-Insurance (home, health and car)
-Utilities (water, gas and/or electricity)
-Phone and internet connection
-Car loan repayments
Keep a handy notebook and write/track a list of the essentials you need to keep yourself and your household going - the basic necessities you can easily expect to pay each month.
Typically, you will spend around 50 per cent of your income on these expenses. However, aim to spend no more than this percentage to ensure you have money left over for savings and unexpected costs that might crop up during the month. This could mean shopping around for the best deals on insurance or being savvy with your grocery list to keep expenses low.
Consult a financial advisor to work out the best way to pay for these expenses, such as setting up an automatic transfer, to ensure you’re covered and never miss a payment.
Personal Pocket Money
Along with your monthly income and necessary expenses worked out, you now have pocket money left over to splurge on the finer things in life. But don’t forget about your savings.
Be extra sure to set aside some money for a rainy day to cover yourself for unexpected situations such as a car breakdown or accidental damage to your rental property.
You may want to stash away some cash for a vacation or even your very own house in the future, whatever your goal may be. If you need some help saving, speak to your bank about setting up a separate account which cannot be withdrawn from online or via an ATM.
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