Setting up a budget is the best way to take charge of your finances. It is a simple but powerful tool that helps you understand where your money is coming from and more importantly, where it’s going.
A budget will tell if you can afford another smashed avocado on sourdough, or whether you should smash your own.
Preparing and monitoring a budget is the foundation for achieving your financial goals. Whether you are saving for a holiday or paying off a loan, a budget will identify any unnecessary waste and spending that could be holding you back.
Preparing your budget
Know your income
Identify how much money you have coming in including your after-tax take home pay and any other sources of income.
Set some goals
How much of your income do you want to allocate to bills, savings and entertainment?
Determine your expenses
Look at all the money going out such as rent, bills, groceries and entertainment. Checking your bank statements, receipts and shopping dockets can help you work out your expenses.
Add it all up
Compare your income against your expenses. Are you in surplus or living beyond your means? How are you tracking towards your goals?
Adjust where required
Depending on your goals, you may need to trim some of your expenses. Prioritise your needs over your wants – you may want both Netflix and Stan, but do you really need both?
Stick to it
Review your budget regularly to make sure you stay on track. Make adjustments as your financial situation changes e.g. you get a raise or have a sudden increase in expenses.
Our budget planner can make the budgeting process much easier.