Use different accounts to help you budget
Some people like to stick to their budget by separating their money into different accounts, each account having a set amount of money to spend on everyday items or bills, for example.
Let’s look at an example of how you might set up your accounts:
- Commitments - such as bills, paying off debt and making rent or mortgage payments
- Essentials - like your groceries, transport and health costs
- Lifestyle – such as buying clothes, movie tickets or eating out
- Saving - for your rainy day fund or one day goals or making super contributions
This can be a good way to make sure you only spend the money you have allocated for that purpose.
First you need to work out how much you need in each account. It’s best to start with how much you earn, then subtract your committed and essential expenses. You can use our Budget Planner for this.
Next, work out how much you can save and how much you want to spend on lifestyle costs.
Simple steps to budgeting with your 50:30:20
The 50:30:20 guide was developed as a simple tool to help people get started and is better used as a guide as it may not always be achievable.
You will also want to tailor this guide to your needs. Sometimes you may need to focus on paying debt before you start building up savings. This guide should help if you don’t have a budget at all.
Here’s how it could work:
- 50% - essential living expenses like rent, bills and groceries
- 30% - lifestyle costs like eating out, going to the gym and buying clothes
- 20% - put into savings, your emergency fund or making extra super contributions