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The dreaded ‘B’ word…

Posted August 31, 2017 by MoneyLink

The only way to take control of your finances is to do a budget – yes – the dreaded ‘B’ word.

Having a budget and knowing where your money is going, and making informed choices about where you spend your money, is the absolute key to wealth creation. If you want to get ahead, it’s all about developing the right discipline towards money.

What is a budget?

A budget shows you if you are spending more or less than you can afford. It enables you to direct your money to where it matters most, so you can stay on top of bills and start putting money towards your future goals.

Why do I need a budget?

Doing a budget helps you get off the treadmill of living from one pay packet or payment to the next. It enables you to sort out your money priorities and find the right balance between spending and saving.

A budget lets you pay off a credit card or loan, plan better for when your big bills are due, and save up for a holiday or big purchase.

It seems like there is a law that says ‘Without a budget expenses naturally expand to consume all of the income available to them.’

Preparing Your Budget

Use the budget planner we’ve suggested to plan where you want your money to go. Choose a time period for your budget that suits your lifestyle – for example, a week, a fortnight or a month.

Know where you stand financially

It is helpful to look at the money going in and out across a whole year. Include regular payments such as your rent or home loan, phone and electricity, car or public transport.

Checking your bank statements, bills, credit card statements, receipts and shopping dockets, will help you to work out all your expenses. Use your best guess if there’s anything you can’t find or if bill amounts vary across the year.

Add in all the money that you receive or are paid over the time period. This could include your pay from your full-time or part-time job, any casual work, your pension, government benefits, child support payments and any money from investments. If your income is variable, make an estimate based on your past year’s earnings.

When you’re working out your money priorities, think about which items you need for your basic living expenses and which are extras or things you could maybe do without if you needed to save some money.

Using your Budget

Print your completed budget planner and keep it somewhere safe.

Before you go to the supermarket or other shops, check your budget to see how much you can spend and then stick to that amount.  You may even want to take a calculator with you. It might make shopping take a little bit longer but you will be able to stay on top of exactly where your money is going.

If you are trying to save money, look at your budget and find ways to cut back on the extras. Try and budget a specific amount for fun, leisure and personal expenses but don’t make your budget so tight that you won’t be able to stick to it. Use the savings plan to keep you focused on your goals.

It’s a good idea to redo your budget every 3 to 6 months to make sure it reflects your current income, spending and what you want to achieve. Once you are comfortable with using and sticking to a budget, you can update it less frequently, like once a year.

You will probably also want to refresh your budget when there are significant changes to your income or expenses, like getting or losing a job, buying or selling a car or house, the extra cost of expanding your family or managing illness.

The best way to save is to put money into a separate savings account as soon as you’re paid and before you get the chance to spend it.

There are a lot of things you can do with any extra cash, including:

  • Open a high interest savings account
  • Look into investing
  • Think about making super contributions

Getting help with your budget

If you have never done a budget before, starting a budget may be pretty tough. At MoneyLink we are here to help and take some of the strain with you. Contact us for an obligation free appointment that will change your life.

Are you keen to create a budget to get ahead and stay ahead? Contact us today.


MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360

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