The information provided in this article is for general informational purposes only and should not be considered financial or accounting advice. For personalised financial guidance, please consult a qualified professional.
With 2025 well underway, February offers a perfect moment to take stock of your financial health and begin better habits. While New Year's resolutions may have already faded for some, now is actually an ideal time to thoughtfully assess your financial position and map out achievable goals for the remainder of the year. If you're looking to build savings, tackle debt, or invest for the future, this pre-end of financial year time provides you a clear opportunity to establish money habits that may serve you well beyond 2025.
Managing Your Finances in 2025
Getting a handle on your money often begins with good budgeting. While it might not be the most exciting task, having a clear budget can help you make informed decisions about your money and provide more control over your financial future.
Understanding Your Financial Position
The first step in creating an effective budget is understanding your complete financial picture. Many people find it helpful to begin with a comprehensive analysis of their income streams, including:
Primary employment income
Investment returns
Rental income
Business or self-employment earnings
Additional revenue sources
Having a clear understanding of your total income can create the basis for realistic financial planning.
Expense Classification and Management
Your expenses generally fall into two main categories: fixed and variable. Fixed expenses remain consistent month to month, encompassing housing costs, utilities, insurance premiums, and loan payments. Variable expenses fluctuate and may include necessities such as groceries, transport, and healthcare, alongside discretionary spending like entertainment and dining.
Setting Clear Goals
Establishing financial objectives for both the short and long term can be beneficial. Consider what you are focused on, is it building an emergency fund, saving for a house deposit, or increasing your retirement savings? Defining your goals may help guide your financial decisions, so it can be useful to ask yourself what your priorities are.
Creating Your Monthly Budget
A successful monthly budget often starts with a systematic approach. Many people find it helpful to gather their bank statements, bills, and receipts from the past three months. This historical data can provide valuable insights into actual spending patterns, rather than just perceived expenses.
First, calculate your total monthly income after tax. For those with variable income, some find it useful to use their lowest earning month from the past year as a baseline to help ensure their budget remains sustainable. It may also be helpful to account for any regular bonuses, investment income, or other revenue streams.
Next, break down your expenses into clear categories:
Essential Fixed Costs: These may include rent/mortgage, loan payments, insurance, and utilities
Essential Variable Costs: Such as groceries, transport, and healthcare
Non-Essential Regular Costs: Like subscriptions, gym memberships, and regular entertainment
Discretionary Spending: Shopping, dining out, and other flexible expenses
Savings and Investments: Including retirement contributions and emergency fund building
Many people find it useful to allocate specific percentages to each category. These allocations can be adjusted based on financial goals and circumstances.
Making Your Budget Work
Implementation is where many budgets face challenges. Some find that setting up automatic transfers for savings and bill payments on payday helps ensure their essential commitments are met before discretionary spending begins. Using a dedicated budgeting app or spreadsheet to track expenses daily can provide real-time awareness and help prevent overspending.
Review your budget's performance weekly for the first month, then monthly thereafter. This can help identify patterns where they consistently over or under-spend, allowing for adjustments. It’s common for initial budgets to require refinements over several months as spending patterns become clearer.
Addressing Budget Challenges
Common obstacles include unexpected expenses, irregular income, and lifestyle creep. Some ways to build resilience into a budget may include:
Creating a separate account for irregular expenses like car maintenance or medical costs
Setting aside a portion of higher-income months if earnings fluctuate
Regularly reviewing and adjusting budget categories as circumstances change
Building an emergency fund to help prevent budget derailment
For business owners and self-employed individuals, setting aside tax provisions monthly may help maintain consistent cash flow and prevent tax-time stress.
Professional Guidance
If you require tailored financial strategies, consulting with a qualified professional can be beneficial. Dennis Curin & Associates offers financial planning, tax services, and business advisory solutions for those seeking expert insights.
If you’d like personalised financial guidance, our team at Dennis Curin & Associates is here to help. Contact our office to arrange a consultation.
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