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Focus on your spending and get out of financial hot water

05 June 2017

Financial stress

EoFY – it sounds like an acronym for a gelato flavour, but EoFY, End of Financial Year, couldn’t be further from the truth. It’s anything but sweet and much more about belt-tightening, and that’s not a bad thing. What EoFY can do is focus you on what you have coming in – your income – and on what you have going out - expenditure - and some of this might be tax deductible. Keeping this in mind, EoFY is a good time of year to engage in some courageous economic self-analysis.

You can use this guide to get yourself out of financial hot water. And if financial stress isn’t a major issue, but you’ve nothing to show for the past year, you can always use the ideas we describe here to spend more mindfully and accumulate savings.

Step One: Freeze all new spending. You can’t get ahead if you keep buying things. Start with stopping coffee out at $3.50 (if you only have one a day at work, that’s $17.50 a week), and lunch at $10 to $15 every time is $50 to $75 a week. Cut your transport costs – walk some or all of the way to work if you can; catch public transport rather than driving. Skip Friday night drinks once a month or try Dry July. Alcohol is expensive. Take a deep breath when you next consider indulging in retail therapy. Ask, do I really need six different bottles of hair care product or just one… better still, do I need any?

Step Two: write down what is coming into your account (what you’re earning, which may not just be wages) and what’s going out – everything on which you’re spending your money.

Step Three: Classify your spending into ‘Needs’ and ‘Wants’. ‘Needs’ are things you have to buy or spend your money on to live: rent; mortgage; credit card debt; utilities; food; transport to work; petrol; child care; school fees; etc.

To help trace your spending use your credit/debit card and bank statements, bills, invoices and receipts.

‘Wants’ are what the experts call, “discretionary spending”. Surprisingly, internet access is not a necessity. Once again, you can usually trace this spending through receipts, or what’s itemised on your credit/debit card statement, etc.

For smaller items, break your day into morning, lunch, evening and think about what you buy in those times and jot down the costs.

(I bet you’re beginning to see the patterns - and they’re not all pretty.)

Step Four: Think about your bills, what you owe and to who, etc. When are they due, what are they for, how much will they be. Put it on a calendar you look at, regularly.

Step Five: Reset your priorities to get your ‘Needs’ on top of your spending list; paid and out of the way. Until your heads comes up above water there is no money for discretionary spending. Once you know what you have coming in, and what you know must be paid out each week or month, you can save what is over and accumulate a backup for emergencies or toward a big ticket item such as a new home, car, holiday, etc. Slowly, once you’ve established a saving habit, you can reintroduce discretionary spend.

If your bills - must spends - are overwhelming, be proactive and talk to someone. Payment options may be available. Having a conversation can often help.

Get saving with some of these apps

Free saving and budgeting apps available iOS and Android

MoneySmart’s Trackmygoals and Trackmyspend: simple apps that do exactly what they say.

Pocketbook is a budgeting app. The app connects to your bank account, so you can track income and expenses. If your accounts (including credit cards) are not with one of the banks integrated with Pocketbook, you won’t benefit from the app’s key advantage and will have to manually enter your income and expenses (similar to other apps).



Use it to turn trash into treasure or to find bargains.


This app asks for no banking, credit, or loan information. Just set a goal and start logging your savings progress. Unsplurge can send you notifications to remind you to save. iOS only. The app doesn’t help you track spending and expenses.

Grocery shopping apps can also be useful for streamlining the weekly or daily shop to save money, keep you to the list, compare prices, etc.

Investment app

Acorns has an Australian version. Acorns links to your bank account. When you spend, Acorns rounds up your transaction to the nearest dollar and invests that change in a diversified portfolio (EFT) at your chosen level of risk.

This is an investment portfolio, subject to market fluctuations. You will also need to pay tax on all realised capital gains. Check out the website for more information.

Cost: App is free but there is a monthly fee ($1.25 per month for balances under $5000 at time of writing).

The articles represent the views of the authors and not necessarily that of the Bank.You should seek independent professional advice before acting on any matters set out in the articles.


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