A lot of people will tell you they have a budget but very few actually stick to it – which really just makes it a piece of paper rather than a budget!  Here are some ideas on writing a budget that will work for you.

We all like saving money, and despite what you might think a budget doesn’t have to be a big, scary monster – it’s simply a method of tracking your spending against your income. Once you understand your finances and what your money is being spent on, you can identify areas you may wish to tweak.

A budget is an important way to keep your finances in order. It’s a detailed monthly (or fortnightly) plan that shows you exactly where your money is coming from, how much is in your pocket and where you are spending it.

Creating a budget can help you quickly pinpoint common pitfalls such as overspending. It should incorporate realistic, short and long term financial goals. By following your tailor-made budget, you have a much better chance of being able to achieve those goals.

Woman budgeting on computer


Even if money is tight, saving is possible so that unexpected expenses aren’t so devastating when they appear. But how to start?

1. Gather your financial information

Gather as much information as you can. Get all your financial information, such as bank and investment account statements, recent rates, utility bills, and any information about money you have coming in and what you spend it on.

2. List your income sources

Write down all sources of income, such as your salary (net income or take home pay) and other income (this could be interest on investments, rent owed to you, share dividends etc). Write down your total income as a monthly amount. If you’re paid more frequently it may be easier to plan your budget over your pay period, such as fortnightly.

3. List your expenses

Here’s the challenging bit, list all of your expenses. These will include rent or mortgage repayment, car repayment, mobile phone and data, car insurance, home insurance, income protection insurance, private health insurance, groceries, petrol, travel, utilities, entertainment and education expenses.

4. Split your expenses into fixed and variable

Divide the expenses above into fixed and variable. Fixed expenses broadly stay the same each month (mortgage/rent, car loan, car insurance, home insurance etc). Variable expenses change from month to month (groceries, petrol, entertainment etc) – so you’ll have to average these.

5. Analyse the the big picture

Once you have totalled your income and expenses, you’ll get an idea of the overall state of your finances. If your income exceeds your expenses, you’re off to a good start. If it’s the other way around, like many, you are living beyond your means and it’s time to make some changes.

6. Create your savings plan

Even if you think there’s no way you’ve got any room in your budget to save, have faith. The budget you have created can be altered to incorporate smarter ways of spending or cutting back in certain areas.

Try a budget calculator

When deciding what tools to use to help you collate your budget, the choice is entirely personal and one way is not necessarily better than another. Some people prefer the good old fashioned pencil and notepad method while others go for something a little more sophisticated such as a budget calculator. There are heaps of spreadsheets available for the task – and there are plenty of free smartphone apps that budget and track your expenses – some even alert you if you’re approaching your budget limit. Just one that springs to mind is Pocketbook, a popular budgeting app which has a key advantage of integrating with many of the major banks. Speaking of which, most banks have useful budget/savings planners and calculators so check yours first to see what’s on offer.

Couple Budgeting Success 

More often than not, making a budget and seeing the figures on paper is a shock at first. However, a budget is not a tablet set in stone. It can be altered according to your goals. You may want to pay off debt, or save for a family holiday, or have money in reserve for the kids’ education. The most important thing about a budget is that you put it into action and stick to it, otherwise it will end up being that piece of paper floating in the breeze of unrestrained spending.

Footnote: Each time you cut your costs or increase your income, put that extra money into your savings. After all, you never hear anyone complaining about having too much savings, do you? And if you need a kickstart – here are 70 ways to save money.

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