The only way to get off the treadmill of living from one pay packet to the next is to commit to a household budget.
Financial experts agree: tracking your outgoings will highlight unnecessary spending and help you stash some extra cash.
Olivia Maragna is the co-founder of financial services firm Aspire Retire. She was recently named financial adviser of the year by the Association of Financial Advisors, and says overspending is common in Australia.
''It's worth remembering that every year in Australia, we spend billions of dollars on food that we don't eat, clothes we never wear, and services we don't use,'' she says. ''So for many people, gaining control over spending doesn't mean doing without, it just means being sensible about spending.''
Maragna says people fall down because they've never been shown how to manage money. Successful people set financial goals and have a plan to achieve them, she says.
''The plan might not be foolproof, but successful people adapt the plan as they go along to give themselves the best chance of succeeding.''
Five ways to get ahead financially
- Spend less than you earn
- Drive down debts as quickly as possible
- Save regularly
- Invest in assets that will produce tax-effective income as well as growth
- Borrow money to boost your investments
Financial goal-setting is particularly challenging for the younger generation, according to Alison Gallagher, co-ordinator of financial literacy program Regret Nothing, which is part of Encompass Credit Union Limited.
''Once you finally leave university and start working full-time, suddenly having a full-time wage can result in some unbridled spending enthusiasm, which is fair enough - finally you have some extra money to go and enjoy life. But once the novelty of earning real money wears off, the key is to set some savings goals and work out a budget,'' she says.
Deciding what you hope to achieve with your savings goal is a great idea.
''A holiday in Europe, a new car or saving for a house deposit are all emotionally charged goals, with easy-to-visualise results and something tangible you can work towards, which will always be more achievable than a number,'' Gallagher says.
Louise Brogan has seen the consequences that not budgeting can have long term. The founder of money-management consultancy All Money Matters says people usually call for advice when they're no longer able to afford the necessities.
''I'd prefer to be seeing people before they get to that desperation point to help them understand how money works and what their own needs are,'' Brogan says.
And while there are hundreds of organisations offering financial advice, think carefully about who you take money advice from, she says. ''Some banks have programs to help with money, but many have vested interests that pull you towards their own products, which might not necessarily be right for your situation.''
Creating a budget doesn't have to be complicated. For one month, write down every purchase you make - from train tickets, chocolate bars, bottles of water and movie tickets to bills, rent and credit-card payments. Tally up your weekly expenditure to see which purchases could be curbed.
''Having a strategy to pay off your mortgage sooner is always a winner as it will reduce your overall interest expenses. Putting your tax refund into your mortgage is a nice little booster, but aim to add an extra 5 per cent on top of that,'' Gallagher says.
Split spending into categories based on necessity. Things like mortgage repayments, utilities and essential food go into the ''must spend'' group. Some things will be ''optional but important'' and others will fit into the ''frivolous'' category.
Track your spending
There are countless cash-tracking apps on the market, although a simple Excel spreadsheet can work just as well to categorise and track spending. Various bank websites also offer free money-tracking tools that are ideal for creating a household budget, as does the Australian Securities and Investments Commission site.
Another great way to save is to set up an automatic direct debit from your main source of income to go into an online savings account, Gallagher says. ''You'd be surprised at how much you can save each week by cutting down on the daily takeaway coffee, snacks and bought lunches, takeaway food and impulse clothing purchases,'' she says.
Craig Wilford is a partner of the financial planning division of chartered accountancy firm Nexia Australia. He recommends households sit down together (or with their financial advisor) and work through their income capacity and look at objectives for now and into the future.
''By agreeing on aspirational goals, such as lifestyle, retirement, education, philanthropy, family and others, the family can determine how well they can achieve those goals based on their current and expected incomes.''
But the real discipline of budgeting is reconciling any gaps between income and asset levels against expenditure goals, Wilford adds.
His top tip is to make sure budgeting is a continuing process, not a one-off job. ''The key to budgetary success is monitoring progress towards goals and ensuring the agreed actions are taking place. Without this, most people fall back into the trap of 'too much month at the end of the money','' Wilford says.
A period of non-spending
Take time to examine where your money goes and where it could be better spent by consciously deciding not to buy anything new for a month.
This October is Buy Nothing New Month, which reflects a growing global movement towards reassessing how and what you buy. Apart from saving and not accumulating excess stuff, buying nothing new for a month can help you cut back on things you don't need.
Buy Nothing New Month encourages Australians to consider ways to extend the life of existing goods and maximise the value of existing stuff, while promoting recycled, free-cycled, up-cycled, second-hand and sustainable alternatives to buying new that are better for your wallet and the planet.