Having a budget helps you see where your money is going. You can put aside money for bills and expenses and set up a plan to reach your financial goals.
Keep in mind to use how often you get paid as the timeframe for your budget. For example, if you get paid weekly, set up a weekly budget.
Follow these steps to get started.
Record your income
Record how much money is coming in and when. If you don't have a regular amount of income, work out an average amount.
Make a list of all the money coming in, including:
· how much
· where from
· how often (weekly, fortnightly, monthly or yearly)
This money could be from your wages, pension, government benefit or payment, or income from investments.
Record and Track your expenses – This will help you understand where your money goes.
Regular expenses are your 'needs' - the essential items you need to pay for to live.
These include
Fixed expenses;
· Rent or mortgage payments
· Electricity, gas and phone bills
· Council rates
· Household expenses, like food and groceries
· Medical costs and insurance
· Transport costs, like car registration or public transport
· Family costs, like baby products, child care, school fees and sporting activities
Debt expenses;
· Personal loan repayments
· Credit card payments
· Mortgage repayments
Unexpected expenses:
· Car repairs and services
· Medical bills
· Extra school costs
· Pet costs
To make sure you've recorded all your expenses, you can look at your bills or bank statements. Include what the expense is for, how much and when you pay it.
The money you have left after expenses is your spending and saving money.
Your spending money is for 'wants', such as entertainment, eating out and hobbies.
Make a plan for what you want to do with your spending money. This will help you to see where it goes and keep within your spending limit and to reach that saving goal.
Set your savings goal
Do you have a savings goal in mind? If you do you can use your budget to work towards it.
Once you know how much money you have for 'wants', you can work out how much of it you'd like to save.
Having some savings can create a safety net for unexpected expenses. Even a small amount set aside regularly will make a difference.
Adjust your budget
Your budget needs to work for you and your lifestyle so it's important to adjust your budget as things change.
For example, if your expenses start to increase you may need to reduce your spending, or change your savings goal OR you might be able to save more if you get a pay rise/you pay off some remaining debt.
Make budgeting easier
To help make budgeting easier, consider having separate bank accounts. You could have:
· a transaction account for bills and expenses
· a transaction account for spending
· a higher interest savings account
You can then automate your budget by setting up a regular transfer to your savings account on pay day. You can also set up direct debits when your bills are due.
Categorize expenses into Essential and discretionary (non-essential).
· Essential are the things you must pay for each month (Food, rent, bills, loans, education etc)
· Discretionary expenses are the expenses that you choose to spend (entertainment, dinners, movies, Uber Eats, streaming services, alcohol and tobacco, sports activities, etc.)
Usually, savings are made by reducing the discretionary expenses, not the essential expenses
You can also reduce your essential expenses by:
· Compare/ shop around for a better deal on your loans, utilities, phone and internet provider, insurances etc
· Take your lunch to work rather than buying it will also save you a lot of money each year
· Did you know that if you buy a coffee in the morning and one at lunch you are spending around $40 per week. This amounts to $2080 per year.
Please download the below budget planner that is programmed through Excel and get started on your budget today.
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