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Sometimes it's easier to not look at your spending habits. The trouble is, you can’t manage your finances until you start to understand them – that’s why you need a budget.

A budget is a great way to keep your finances in order – it’s a detailed monthly plan that shows 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. Despite what you might think, a budget does not have to be restrictive or overly impact your lifestyle. It should incorporate realistic, short and long term financial goals and by incorporating your spending and saving into a budget, so you can achieve them.

The basic steps of setting up a budget remain the same, whether you prefer to use a pen and paper, or a budgeting tool.

  • Step 1 - Gather as much information as possible: Get all your financial information, such as bank and investment account statements, recent utility bills and any information about the money you have coming in and what you spend it on. The My Spend budgeting tool in NetBank is a great way to see how you are spending your money.

  • Step 2 - List income sources: Record all sources of income, such as your salary (net income, or take home pay, is fine) and outside income (e.g., interest on investments). 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 – e.g. budget per fortnight).

  • Step 3 - List your expenses: Now the challenging bit, list all of your expenses, such as rent or mortgage repayment, car repayment, mobile phone and data, car insurancehome insurance, groceries, petrol, travel, utilities, entertainment and education expenses. You can keep track of your expenses with the My Spend budgeting tool in NetBank.

  • Step 4 - Split expenses into fixed and variable: Fixed expenses broadly stay the same each month (mortgage/rent, car insurancehome insurance, car loan, etc). Variable expenses change from month to month (groceries, petrol, entertainment, etc) – so you’ll have to average these. If you're a CommBank customer, the MySpend tool in NetBank can help you with this.

  • Step 5 - See the big picture: Once you have totalled your income and expenses, you can see the bigger picture. If your income exceeds your expenses, you’re off to a good start. If it’s the other way round, like many Australians, you are living beyond your means and it’s time to make some changes.

  • Step 6 - Create your savings plan: Your savings plan is based on your initial budget, but with changes made to enable you to save. Work out how you can spend smarter or cut back on spending in other ways. 

You can then make adjustments to your budget. The key is making sure it is always balanced with all income accounted for and budgeted to a specific expense, including contributions to a savings account. Each time you cut your costs or increase your income – the amount set aside for saving should increase. 

We have savings strategies and money saving tips to help you balance the books. If you’re still struggling why not speak to one of our Savings Specialists who can help you get started.

How to create a budget

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Things to know before you Can: The advice on this website has been prepared without considering your objectives, financial situation or needs. Before acting on the advice, please consider its appropriateness to your circumstances. Please view our Financial Services Guide.

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