I am on a really good income, I’m single, but I seem to live from pay check to pay check.
First of all, congratulations on achieving career goals and making a good income.
We all know that each person making the same income have different spending abilities. Have you ever considered why?
But before we get into that, let’s think about this for a minute.
In Australia, there are a couple of ways to assess your living expenses – especially the methods that banks use. One of the methods is called Household Expenditure Method or HEM. According to HEM, a single person should be able to live on $2,385 a month (not including rent). This amounts to around $28.6k! Lets say rent will be around $1500 a month, so add another $18,000 to that figure and your total expenditure for a year should be around $46.6k.. Even if we round it off to $50k, someone earning a $100k and their take home pay being $73,368 should be able to save $23k!
So, why does a person earning $50k not able to save anything, let alone $23k!
Have you watched the movie – “Confessions of a Shopaholic”? I only watched it recently and it probably prompted me to write about this today! In this movie the heroine just cannot stop shopping – beautiful things that girls like – hand bags, shoes, clothes – anything that is on sale, but she doesn’t need!
Ask yourself if you are one of those girls who just shops regardless of whether it is a necessity or not? Or do you spend a lot of money on eating out?
This is why it is so important to know your numbers. I assume you know how much money hits your bank account. But unless you know how much money goes out and where it is spent on, it is really hard to make those small changes that will help you get on the saving path.
As with anything, you first need to have your “why”? Why do you want to have savings? May be your ‘why’ is to not live from pay check to pay check. Your ‘why’ could be peace of mind or to take a holiday or feel rich!
Find out your why!
Once you do this and use a budgeting calculator, you should be on your way to take the first step towards financial freedom!
Have you been one of those shopaholics and then reformed? Or do you need help? I’d love to hear from you.