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Managing Your Budget

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Budgeting can be seen as stressful or overwhelming. However, budgeting is simply a means of looking at your income and expenditure to help you find the right balance between spending and saving. A budget is an easy way to help you manage your money and to create clear savings goals.

Why have a budget?

A budget is a tool that can help you get on top of your finances. It can help you make better choices when it comes to spending by making sure you’re spending your money on what’s important and not wasting it on things that aren’t.

You might think that you don’t need a budget, and that you’re doing well financially without one. However, research shows that people who have a budget have higher financial wellbeing than those that don’t. ^

Tracking your spending

Where does all my money go? Very few people can answer this question accurately. Learning how and where you spend your money is the first step in managing your finances.

There are several Financial Management apps for your mobile that can be useful in tracking your spending, such as the WeMoney, Canstar, or Frollo Apps.

Tracking your spending is important to identify and eliminate wasteful spending habits in your financial life, helping you take control of your financial wellbeing. ^

Creating a budget

A budget can help you plan your expenses and save for things you want.

Managing credit or simply covering expenses is not always easy but following these steps on how to create a budget will help you control your finances:

  • Step 1 - Add up your monthly income from all sources;
  • Step 2 - Record all of your monthly spending (using budgeting software, an App or even just pen and paper);
    • Rent or mortgage repayments,
    • Food and household needs,
    • Utilities (phone/electricity/water),
    • Transport expenses (travel passes, petrol, car registration, maintenance),
    • Health needs,
    • Insurance (health, house, car, travel etc),
    • Education (for you or your dependants),
    • You should include yearly expenses such as car registration and insurance in your budget. You can divide these totals by 12 to get the monthly expense amount.
  • Step 3 - Also record regular spending for lifestyle and entertainment:
    • Entertainment (incl subscriptions),
    • Clothing,
    • Fitness,
    • Personal grooming,
    • Home appliances.
    • If you are not sure as to how much you spend; either make an estimate and review it after 3 months; or consider tracking your spending for a month.
  • Step 4 - Allocate additional funds to cover:
    • Loan repayments,
    • Additional superannuation contributions,
  • Step 5 - Subtract your total monthly expenses from your total monthly income:
    • You're ahead of the game if you project to have money left after performing this calculation.
    • If you think you'll fall short, revisit your expenses to look for areas you can reduce or eliminate. It’s particularly critical to compare needs versus wants at this point.
    • You may choose to look for any spending that was spontaneous, wasteful or a luxury that you could do without in the future.

Online budget calculator

To help you plan your budget, you can use our budget calculator which takes into consideration all of your general expenses and gives you an idea as to how much you could save.

How to curb impulse buying

Next time you are tempted by an unplanned purchase, ask yourself:

  • Do I really need it?
  • Will I really use it?
  • Will I still like it next month/next year?
  • Is the price likely to be reduced at an end-of-season sale?
  • If I don't buy it now, do I want it so much that I will make a special trip later to come back and buy it? ^

Develop a safety buffer

The key to successful money management is to put funds aside during the good times and to minimise financial stress during bad times. Remember to allow for unexpected debts and emergencies e.g. illness in the family, loss or breakage of possessions, career interruptions etc.

Tip - how much is enough?

  • Singles and couples should consider developing an emergency fund equal to 2 months take-home pay in case of retrenchment or emergencies.
  • Those with young families should aim to build up an emergency fund equal to 3 months take-home pay. ^


Saving may appear to be difficult and disciplined, but think of the feeling of being able to afford to buy something you have wanted for a long time. Here are some tips to help you on your way. ^

Set yourself a savings target

If you've never been a successful saver before, start off slowly. Leave committing to medium or long-term goals for a while until you're confident a saving strategy is within your reach.

Tip - the 10% rule

  • Aim to save 10% of your gross annual income. This breaks down to 5% for short-term goals and 5% for long-term goals,
  • Set yourself one short-term goal - perhaps 3 months away - that requires only a small amount of money,
  • Then set aside 10% of your income each week in a separate savings account,
  • At the end of 3 months, use the money you have saved to pay for your small goal - perhaps a weekend away or a new piece of clothing, and if there is any money left over make that the first instalment in your next savings goal. ^

Teaching Kids about money

It's important to teach children about money at any age. Show them where money comes from, how to budget, how to spend wisely and how to set savings goals.

Take a look at this video for 5 tips on how you can teach kids about money:

Quick budget reminders

  • Don't make your budget so tight that it's impossible to keep,
  • A budget is not set in stone. It is there to help, not hinder you. A sign of a successful budget is one that is flexible during tough times and able to reward you when your prospects are brighter,
  • If you blow your budget one month, try to make up for lost finance in areas that are more flexible e.g entertainment or eating out,
  • Revisit your budget every 3 months to see if there are any areas you can tighten up to improve your financial
    flow. ^

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