Listen: Finance guru Jai Hobbs shares tips with Sam Robinson on creating a new budget for a new financial year
It’s a new financial year – the perfect opportunity to create a new budget that will help you in the long-term.
July 1 and a new financial year is here, and yet the same old money pressures linger. It can be so hard to keep on top of bills, mortgage payments, and everyday essentials like groceries and fuel. Author and mortgage broker Jai Hobbs joined Hope Breakfast to share some advice on how best to start a new budget, and a suggestion to implement the ‘”50/30/20 Rule”.
“Put simply, 50 per cent of your income and take-home pay should be spent on things that you need, be it food or a roof over your head, essential travel to work, those typical items that you can’t live without,” Jai said.
“Then, 30 per cent of that income on your wants. That’s the entertainment, going out, holidays, whatever you do for fun, and things you don’t necessarily need but make life enjoyable. Then 20 per cent of your income to save or invest.
“This is a guide. But if you can keep to this, you’re on your way to ensuring you’re managing your money properly.”
When asked about the biggest mistakes people make when budgeting, Jai’s quick response was in regard to credit.
“The easiest one is spending on credit. Using tomorrow’s income to pay for today’s lifestyle,” Jai said.
“The opportunities out there to do that are just too easy with ‘buy now, pay later’ schemes like Afterpay and Zip Pay.
“Though there’s no interest on these, you are still using tomorrow’s income to pay for today’s lifestyle. Being very simple and being honest with yourself about living within your means is the first step. Spend less than you earn.”
“Being very simple and being honest with yourself about living within your means is the first step,” – author and mortgage broker Jai Hobbs
Jai also explained that maintaining a budget shouldn’t be about creating stress, but simply managing your money a little better.
“Understanding what you’re earning, and having control of what you’re spending is 101 in money management. Not to the nth degree in stressing your life over it, but definitely something to make sure you’re not living well beyond your means.”
You can read more of Jai’s advice in the book Financially Literate Youth, and hear more of his conversation, including sharing the best ways to budget in the midst of financial hardship, in the player above.