A budget is like a blueprint for financial success. You might be able to get by without one, but having a budget will help you stay on top of your bills and even start to plan for the future.
Here’s how to get started:
How much do you spend?
Track how much you spend during an average month. Include everything – groceries, gym membership, subscriptions such as TV or movies, transport costs, socialising, shopping, paying off debt (credit card, HELP fees) and rent. Also look at, and average out, your annual utility bills.
Don’t fudge the numbers. Underestimating how much you spend will mean your budget is doomed to fail. To get an accurate picture, check your bank statements and categorise your spending using Spend Tracker.
What’s coming in?
Check your payslip, focusing on net income (the actual amount that goes into your bank account after tax and super is deducted) to work out how much you’re earning in an average month. If you’ve already got some savings set aside, look at the interest you’re earning on that too.
Subtract the average amount you spend from your average income. This is the amount you’re left with to either put towards clearing debts or increasing your savings. To make things easy you can lay this all out with our Budget Planner.
Does anything need to change?
If the difference between what you’re spending and what you’re earning is too slim, look at what you spend and decide if it’s a fixed (such as rent) or variable cost (such as groceries, going out). Are there areas where you could cut back on your variable costs? If so, look at how much you could save and make the change to your budget.
Set a savings goal and automate
With what is leftover, set yourself a savings goal and schedule a recurring payment (once you’ve been paid for example) into a savings account, so that you’re not tempted to spend any of your potential savings. You can set up a savings goal in NetBank, track your progress and top up your goal when you’ve got some extra cash.
Keep an eye on your budget and regularly revisit it to see if you need to adjust it to reflect changes in your circumstances.
Next up: How to spend your income