We are often asked by our clients to help with budgeting to assist them in managing their day-to-day expenses and to assist with savings goals.

So here are some tips to get you started on making a budget of your own and some guidance on setting up some savings goals.

Why do you need a Budget?

A budget is not just boring numbers – it can help you:

• Pinpoint where all your money goes
• Track your spending so that you can spot waste and spend more wisely
• Save for the things that matter to you- a holiday, your first or next home
• Avoid running out of money before your next pay
• Reduce the need to use credit cards, or Buy Now Pay Later for everyday purchases

The Steps to Making a Budget:

1. List all the money that you have coming in, including:
   • Wages and salaries
   • Government payments
   • Investment income
2. List your Expenses – Expenses are what you spend to live:
   • Rent or mortgage payments
   • Groceries
   • Electricity, rates, gas, and phone bills
   • Regular medical costs
   • Insurance
   • Transport costs- rego, petrol, or public transport
   • Other regular costs that you know about
3. Then add debt expenses such as:
   • Personal loan repayments
   • Credit card repayments
   • Other debt repayments- include BNPL
4. Finally, include irregular or unexpected costs e.g.:
   • Car repairs and services
   • Annual bills
   • Pet costs

Your starting point will be your bank statements or online banking transactions for the last 6 months. To collate your results, the following tool is available on the government’s MoneySmart website will make life easy. Simply add in all the money earned and spent.

MoneySmart Budget Planner Link

Once you add it all in, the planner will calculate your results and show if:

• You have money left over and are able to save
• You are spending more than you earn, and you would need to assess your spending and cut back on expenses.

How much savings should I have?

Once your budget is on track, you may wonder how much savings you should have.

The standard benchmark is that for an emergency savings fund, you should have 3-6 months of essential living expenses. Financial experts generally recommend 20% of your gross income for long-term wealth.

Even starting small helps- $20.00 set aside weekly will add up to just over $1000.00 in 1 year’s time.

Sometimes it helps to automate your savings either by a direct deposit from your wage account, or by directly paying a small part of your wage directly to a separate savings account.

Your needs will change at different times in your life, depending on your goals, family circumstances, and as you approach retirement, where your income streams will change.

For example, it is estimated that at age 30, you may want to have saved 1 year of your annual salary, but by retirement age (67), 10 times your annual salary.

Tips for cutting back on Expenses

Once you have decided to track your spending by taking the time to start a budget, you can start by making small changes that can result in big wins over time:

• Separate spending into needs and wants- Needs are essential (rent, food, utilities, and transport). Wants are things you enjoy but can reduce or delay. Think about what you can sacrifice without affecting your basic needs?
• Find a quick win
  • Cancel unused subscriptions
  • Switch to a cheaper phone or internet plan- shop for cheaper insurance
  • Plan your meals to avoid food waste- eat in rather than take-away
• Set aside money for quarterly or annual costs- perhaps have separate accounts. Set reminders for upcoming bills

The Moneysmart website again can be your go-to here with lots of tools and tips to assist you with managing your expenses to assist you balance your own budget and hopefully boost your savings to meet your goals.

Moneysmart Budgeting Link