How to plan a budget

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Having trouble sticking to a budget?

If you feel like you’re not making the most of your monthly income, or that you’ve not been seeing the balance of your savings account go in the direction you’d hope, you might have trouble sticking to a budget. When it comes to budgeting, there shouldn’t be any guess work. That doesn’t mean you can’t treat yourself every now and then, but it means that you should know exactly how much money you have each month to spend, save, and play with.

 

Set a saving goal

It can be useful when you are budgeting to set a saving goal that helps keep your eyes on the prize. Depending on what you are saving for, the goal could be big or small. Most people are saving up for big ticket goals like a deposit on a home or investment property, but you could also be dreaming of clearing credit cards or loan debts. Make sure you write down what you’re saving for – you might even want to put it in a place around your home like on the mirror or the fridge to motivate yourself each day.

 

Calculate your monthly income

Once you’ve set a goal, it’s time to get down to the numbers. Calculating your monthly income can be simple if you get wages from a part time or full time job. If you’re a casual worker, or you get interest from investments, then it might be a little more complicated as you’ll need to work out averages of how much you receive each month. To do this, go through your bank or tax statements to determine your average monthly income – but be realistic, if you focus only on the months you received a lot of income, you’ll only be setting yourself up to fail with your budgeting efforts. Whichever your situation, you should think about every penny that goes into your account to gain a good understanding of exactly how much income you receive.

 

Calculate your monthly outgoings

Calculating your monthly outgoings is where most people fall down – and we don’t blame them! It’s difficult to accurately determine how much money leaves your bank account each month. The biggest mistake we see people make is setting unrealistic assumptions or expectations of how much they’re spending. If you are treating yourself to a $4 coffee each morning, that’s fine, but you need to include it in your outgoings. If you’re spending a little too much on drinks every Friday or Saturday night, that should go into the outgoings too. This is about honesty – so get out your bank accounts and a spreadsheet, and work out how much on average you’re spending on the following things:

  • Motor vehicle / transport including insurance, tax, public transport
  • Household expenses including rent, utilities, council rates, maintenance
  • Living expenses including groceries, medical, clothing, education, pet food, child care
  • Insurance and superannuation including life insurance, health premiums, voluntary super contributions
  • Loans and credit card payments including mortgage payments, store cards
  • Leisure and entertainment including holidays, restaurants, sports, hobbies, gifts

 

Use an online budgeting tool

Once you’ve got all this information, it’s best to use an online tool to then work out your budget. With Reventon’s online budget calculator, you can enter all of the information above and receive an accurate budget either weekly, monthly, or annually. You might be surprised at the total costs.

Plan your next steps

Hopefully during this exercise, you will have already identified some areas where you can make some savings. In doing so, you’ll achieve your saving goal far sooner. Remember to be realistic about how much you’re willing to sacrifice (and therefore how much you can save), especially at the beginning of your budgeting journey. Maybe first it’ll be those $4 coffees and drinks at the bar, and later on you can determine some bigger changes you can make to enhance your saving efforts.

 

Get budgeting support

It’s important when you’re considering saving or budgeting to have people around you that understand what you’re trying to do, and can give you financial and moral support along the way. You might want to share your budgeting ideas with friends and family so they can help you out.

You may also want professional support in identifying areas you can save – plus you could get help to determine the best techniques for debt reduction, credit card consolidation, and saving for a deposit. At Reventon, that’s exactly what our team is here for. What’s more, you can get a free advice session with one of our experienced team to help define your goals and plan the path to reaching them.

Book your free advice session now


 

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