It’s a question that often results in the same answer; just a little bit more then I currently earn!

Think back to your first job, I bet the pay cheque wasn’t huge but you somehow managed to do all things you wanted on that relatively small wage. Now think about how much you currently earn, sure you can probably afford nicer things: cars, clothes, TV’s, but I bet you wish you still had more.

The key to making what money you do have work, is a budget. I know that ‘budget’ is a dirty word, but a budget doesn’t necessarily have to be a complex spread sheet, it can be as simple as setting a financial goal and then working backwards.

Say you want to spend $5,000 on an overseas trip in two years’ time. Instead of waiting out the two years and then putting the $5k on the credit card, why not work backwards and put aside a little each week to reach your goal? To save $5,000 over 2 years all you need to do is put away $50 a week.

Now instead of having your savings in with your everyday account, why not open a high interest savings account with your bank (they all have them) and set it up so that your $50 is automatically sent to the high-interest account each week. This way, you will reach your savings goal without having to think about it or accidently spending the money.

Using a separate savings account and automatic payments is a great way to budget without too much work. In my opinion this method works well for short term savings goals. If you are savings for something over the longer term (house deposit, kids education) then you may want to consider other options like a first home savers account (FHSA) or investments tailored for longer timeframes (such as shares or property).

The beauty of budgeting this way is that you can still spend every cent in your everyday account, but at least your savings are automatically squirreled away without you even having to worry about it!

Hewison Private Wealth is running a series of events tailored to Young Investors throughout 2012, to promote financial literacy and wealth accumulation strategies. You can view the footage from our recent Young Investors event at: www.hewison.com.au

For more tips on budgeting or to book a free financial consultation, contact us on (03) 9682 1900 or email us at info@hewison.com.au