Budgeting is truly one of life’s real struggles, but it isn’t all sacrificing and living below the standard as you may think. Budgeting revolves more around living within your means and savings some precious dosh along the way. It’s surprisingly easy once you figure out the method that is right for you and ensure you stick to it. It can be hard when you see a different pay packet each cycle, but the budgeting gods still maintain that it is doable! We’ve all heard the saying that, “it only takes 21 days to form a habit,” but, like a game of Chinese Whispers, this has been distorted over time. According to research from the University College London, 66 days is all it takes to form a habit, which seems more attainable in accordance with pay cycles. So, get ready to test the PERK method out and we will see you in 66 days.
What is PERK?
The PERK method was devised by author and Certified Financial Planner Robert Pagliarini to work as a tune-up of your current budget. It is less concerned with the physical numbers and rather detects which expenses you can go without or reduce. It’s the process of elimination where you start with a list of all your current and upcoming expenses. From there you organise each expense into one of four categories: postpone, eliminate, reduce, or keep.
Pagliarini detailed each category in an interview with Equifax:
“Items in this category could include buying a new car, remodelling a kitchen, installing new carpet, or incurring a smaller expense like buying a new TV or upgrading to an iPad 2… postponing an expense gives you more money today so you can save or invest it, Pagliarini says. Plus, it helps avoid impulse purchases.”
“’This is really where you want to spend as much time as possible,’ says Pagliarini. ‘These are things that made a lot of sense at one point but don’t anymore and probably haven’t in a while.’”
“This category is a ‘gold mine of opportunity,’ Pagliarini says. ‘Look at each of your expenses and ask, ‘Is it possible for me to reduce it?’”
“Some expenses are must-haves, like health insurance, auto insurance, mortgage payments, and rent. Mark these with a ‘K’.”
Inventory of your budget
Basically, the PERK method is taking inventory of your budget and aligning them with your current financial goals. Should you need to save more for an upcoming expense like car insurance, it’s best to ditch some of the luxuries you spend on. It may seem unattainable, but by putting them in the ‘postpone’ basket, you are still able to look forward to having whatever you desire in the future rather than eliminating it completely.
Should you be in a bit of a jam, you could look at eliminating some expenses all together. For example, if you have a gym membership you hardly use, cancel it and get use to enjoying the great outdoors or follow some home workouts posted on the web. You can also stop buying takeaway once a week and eat what you have at home – it’s like you’re killing two unhealthy and expensive birds with one stone!
Looking at a loan?
If you are looking for finance because your vehicle is on its last legs, you may need to PERK up your budget to fit in loan repayments. It should be easy enough to do if you are set on being frugal and need transport to work. Postpone those home renovations and reduce your spending at the grocery store and you’ll be surprised how affordable and easy to squeeze a loan in could be. Plus, you get a new car out of it, so you’re the real winner!
By making sure all your expenses match your income, priorities, and financial goals, you should find no dramas with budgeting. It’s just that sometimes they need a little review to help keep you on-track and boost your desire to save!
After vehicle finance?
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