Struggling to create and stick to a budget? You are not alone. Many Australians find budgeting challenging, but with the right approach, it can be easier than you think. Understanding where your money goes each month will help you take control of your finances, eliminate unnecessary expenses, and build a more secure future.
To help you get started, we have put together a step-by-step guide to budgeting, including ways to track your spending and identify money leaks. Plus, check out our MOVE Bank Budget Planner to simplify the process and keep your finances on track.
Getting Started: How to Build Your Budget
Before you can manage your money effectively, you need a clear picture of your income and expenses. Follow these three simple steps to set up a realistic budget:
Step 1: Record Your Income
Start by listing all sources of regular income, including:
- Salary or wages
- Government payments such as Austudy or Centrelink benefits
- Investment income (only include reliable, consistent earnings)
If you receive irregular income, such as overtime payments or bonuses, it is best to exclude them from your budget. These can vary from month to month, so relying on them for everyday expenses may lead to financial strain.
Step 2: List Your Expenses
Expenses fall into two main categories: fixed expenses and variable expenses.
Fixed Expenses
These are the essential costs that remain relatively stable each month, including:
- Rent or mortgage payments
- Utilities (electricity, water, internet)
- Insurance (health, home, car)
- Loan repayments
- Groceries and essential transport costs (petrol, public transport)
Variable Expenses
These costs can fluctuate and often include non-essential spending. To accurately track variable expenses, follow this method:
- Take a piece of paper and divide it into four sections labelled Week 1, Week 2, Week 3, and Week 4.
- Review your bank statements or use the MOVE Bank app to check your transactions from the past month.
- List every purchase that does not fall under fixed expenses, such as coffee, online shopping, dining out, and entertainment.
- Sum up your weekly totals to see how much you are spending.
Many people are surprised at how much they spend on small, everyday purchases. Identifying these ‘money leaks’ will help you make adjustments and save more.
Step 3: Compare Income vs. Expenses
Once you have listed all your expenses, compare them to your total income:
If your income is greater than your expenses, you are in a great position to start saving or investing.
If your expenses exceed your income, it is time to adjust your spending habits and prioritise essential costs.
Managing Your Budget Effectively
Cut Back on Unnecessary Expenses
If your budget is tight, look at your variable expenses first. Small changes can make a big difference, such as:
- Reducing takeaway coffee and making your own
- Taking public transport instead of using rideshare services
- Cancelling unused subscriptions
- Shopping for groceries with a list to avoid impulse purchases
Allocate Money for Enjoyment
A realistic budget should include an allowance for entertainment and hobbies. Whether it is dining out once a month or treating yourself to a movie night, setting aside funds for enjoyment can help you stick to your budget without feeling restricted.
Regularly Review and Adjust Your Budget
A budget is not something you set and forget. Review your budget every few months to ensure it reflects your current financial situation. Life changes such as salary increases, new expenses, or unexpected costs may require adjustments.
Use a Budgeting Tool for Simplicity
Keeping track of finances manually can be time-consuming. The MOVE Bank Budget Planner is designed to make budgeting easier by helping you categorise expenses, identify saving opportunities, and stay on top of your financial goals.
Final Thoughts
Budgeting does not have to be complicated or stressful. By tracking your income and expenses, identifying unnecessary spending, and using helpful tools like the MOVE Bank Budget Planner, you can take charge of your finances and work towards a more secure future.
Start your budgeting journey today and see how small changes can lead to big financial improvements!
This blog post is for general information purposes only and is not intended as financial or professional advice. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product or other professional advice. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article.
