There isn’t one correct way to manage money. There is, of course, lots of good advice on the subject, but ultimately your expenses will depend on your individual setup.
“The best thing you can do to relieve financial stress is to come up with a plan,” says Tammy. “A budget will show you what sort of arrangements are affordable and whether you’re dealing with a long-term cash flow problem or short-term crisis.
“Set aside time to create a detailed and long-range budget that includes all of your expenses over a 12-month period. Make sure that you include everything—not just your weekly and monthly expenses, but also your quarterly and half-yearly bills, such as car registration.”
Once this kind of budget plan is in place, it’s time to get micro. For 30-year-old Sydney-based renter Louise, who spends around 40 per cent of her income on her accomodation, compartmentalising is key.
“I have separate accounts for bills, rent, savings and spending money and have my money automatically transfer to those accounts every payday so that I don't have to worry about it,” she explains. “That way, I know all bills and rent are being covered, my savings are in another place that I can't access as easily, and whatever money is left over in my spending account is mine to spend. That’s the only way that stops me from feeling overwhelmed by my finances.”
29-year-old Steph, based in Manchester, recently made the decision to buy her own property. She puts approximately a third of her income towards a reduced-term mortgage.
“In hindsight, I think taking on a reduced term is actually quite stressful,” she says. “When I consider that my mortgage is about 25 per cent of my salary, but then I have to pay bills, council tax and a service charge all by myself, it all actually exceeds a third of my salary in total. Ultimately I can afford this, but only on the basis that I'm careful with the pot that’s left.
“I spend hardly anything on clothes these days and eat out way less. But I do this knowing that I won't have to keep paying this mortgage off until I'm 60, which is the future most people my age have signed up to.”