Having a budget helps you see where your money is going. You can put aside money for bills and expenses and set up a plan to reach your financial goals.
Follow these steps to get started. Use how often you get paid as the timeframe for your budget. For example, if you get paid weekly, set up a weekly budget.
1. Record your income
Record how much money is coming in and when. If you don't have a regular income, work out an average amount.
Make a list of all the money coming in, including:
- how much
- where from
- how often (weekly, fortnightly, monthly or yearly)
This money could be from your wages, pension, government benefit or payment, or income from investments.
2. Add up your expenses
Regular expenses are your 'needs' - the essential items you need to pay for to live. These include:
Fixed expenses, for example:
- rent or mortgage payments
- electricity, gas and phone bills
- council rates
- household expenses, like food and groceries
- medical costs and insurance
- transport costs, like car registration or public transport
- family costs, like baby products, child care, school fees and sporting activities
Debt expenses, for example:
- personal loan repayments
- credit card payments
- mortgage repayments
Unexpected expenses, for example:
- car repairs and services
- medical bills
- extra school costs
- pet costs
To make sure you've recorded all your expenses, look at your bills or bank statements. Include what the expense is for, how much and when you pay it.
If you tracked your spending, use your list of transactions.
3. Set your spending limit
The money you have left after expenses is your spending and saving money.
Your spending money is for 'wants', such as entertainment, eating out and hobbies.
Make a plan for what you want to do with your spending money. This will help you to see where it goes and keep within your spending limit.
4. Set your savings goal
If you have a savings goal you can use your budget to work towards it.
Once you know how much money you have for 'wants', you can work out how much of it you'd like to save.
Having some savings can create a safety net for unexpected expenses. Even a small amount set aside regularly will make a difference.
5. Adjust your budget
Your budget needs to work for you and your lifestyle so it'simportant to adjust your budget as things change.
For example, if your expenses start to increase you may need to reduce your spending, or change your savings goal. Or you might be able to save more if you get a pay rise or you pay off some debt.
6. Make budgeting easier
To help make budgeting easier, consider having separate bank accounts. You could have:
- a transaction account for bills and expenses
- a transaction account for spending
- a higher interest savings account
You can then automate your budget by setting up a regular transfer to your savings account on pay day. You can also set up direct debits when your bills are due.
FAQs
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
Is there a free budget template? ›
Monthly Budget Template for Google Sheets
Google Sheets' native free monthly budget template is a user-friendly income and expense tracker. It allows you to plan and track your expenses every month, ensuring you stay on top of your financial goals.
How to set up account for budgeting? ›
The trick is to have a purpose for each checking account and have a credit or debit card align with it. Your debt, bills, and fixed expenses should all be directly debited from your “Bills” account. Your variable expenses can go on your credit card and be paid from the “Spending” account.
How to budget $4000 a month? ›
making $4,000 a month using the 75 10 15 method. 75% goes towards your needs, so use $3,000 towards housing bills, transport, and groceries. 10% goes towards want. So $400 to spend on dining out, entertainment, and hobbies.
What is the 40 40 20 budget rule? ›
The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.
What is the budget rule in Australia? ›
There are many simple ways to budget, but one of the most popular is the 50-30-20 rule. This rule involves allocating 50% of your income towards essentials, such as bills, 30% of your income to non-essential expenses, such as entertainment, with the remaining 20% spent on debt repayment or saved.
What is the average daily budget for Australia? ›
Most backpackers will spend between $60 - $130 AUD per day in Australia, with an average of around $100 AUD per day. That's around £50 GBP, €60 Euros, or $65 USD per day. However, planning a travel budget is tricky because everyone is different!
What is the average monthly budget in Australia? ›
Average household spending by category: 2024
According to the Beforepay Cost of Living Index for February 2024, the average Aussie spends $60.78 per day - which is $1,763 per month - without important expenditures like rent and mortgage costs.
Is there a completely free budget app? ›
Available for iOS and Android users, the Mint budget app allows you to link up your bank accounts and monthly bills to create a budget, and it suggests ways to save based on your spending habits. It also notifies you if your spending seems unusual, which can help you curb your vices and even detect identity theft.
How to make a simple budget spreadsheet? ›
How to create a budget spreadsheet
- Choose a spreadsheet program or template.
- Create categories for income and expense items.
- Set your budget period (weekly, monthly, etc.).
- Enter your numbers and use simple formulas to streamline calculations.
- Consider visual aids and other features.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
What documents do you need to start a budget? ›
At its core, a budget is a worksheet with separate categories for income, expenses, and savings. So, you'll need to gather your financial documents, such as pay stubs, credit card and bank account statements, and auto or student loan bills, to ensure you have enough information to get started.
Where do I start with budgeting? ›
Start budgeting
- Make a list of your values. Write down what matters to you and then put your values in order.
- Set your goals.
- Determine your income. ...
- Determine your expenses. ...
- Create your budget. ...
- Pay yourself first! ...
- Be careful with credit cards. ...
- Check back periodically.
Some Experts Say the 50/30/20 Is Not a Good Rule at All. “This budget is restrictive and does not take into consideration your values, lifestyle and money goals. For example, 50% for needs is not enough for those in high-cost-of-living areas.
What is the 50 30 20 rule for 401k? ›
Key Takeaways
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
What is the alternative to 50 30 20? ›
The 60/30/10 budgeting method says you should put 60% of your monthly income toward your needs, 30% towards your wants and 10% towards your savings. It's trending as an alternative to the longer-standing 50/30/20 method.
How to budget $5000 a month? ›
Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.
