How to do a budget
The ins and outs of budgeting
The best way to take control of your finances is to do a budget.
This is a simple tool that helps you understand the money going in
and out of your household.
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. Here are our simple steps to prepare and
use a budget.
Why do 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
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
Video: Michelle's journey to home ownership
Video about buying a home.
Michelle explains how our tools helped her start saving for her
Use our budget planner 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.
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. 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
When 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
study: Alex's rate bill strategy
Alex knows she has to pay rates of about $300 every quarter. To
plan for these payments, she sets aside $100 a month into a special
bank account called 'bills'. This way she is prepared when the bill
is due and can use the money she has put aside.
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
You may even want to take a calculator with you, or use our free
TrackMySpend mobile app to keep track of your spending on the go.
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
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.
If you have money left over (a surplus)
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
There are a lot of things you can do with any extra cash,
When you receive a pay rise, bonus, special payment or tax
refund put the money straight into your savings account or
superannuation to give it a boost. For more information
see getting a windfall.
If you're spending more than you can afford (a deficit)
This is not the end of the world but you do need to take action
to fix this. Check your budget to make sure you've got all the
amounts right and look at your expenses to see if there are any you
could reduce. What could you cut out or cut back?
If you're still in the red or are finding it hard to work out
what to cut, read the section on managing debts. Or talk to a financial counsellor - they are
free and can help you take control of your money.
Getting help with your
If you are on a low income or have never done a budget before,
starting a budget may be pretty tough. You will find that it does
get easier though. The first budget is the hardest but you will get
better at it as you go along.
There are also people who can help you with budgeting such as financial counsellors.
The following pages have lots of information and
Budget and monitoring services
Beware of budget plans sold by high-pressure selling. You could
end up paying $5,000 or more for a 'budget' and a 'monitoring
service' that the salespeople claim will help you pay off your
loans faster. Unfortunately, these budgets can be totally
unrealistic and involve all sorts of sacrifices that no-one could
live with. The 'monitoring service' may also be a waste of
The best way to do a budget is to have a go yourself. If you
can, get help from a trusted friend who is good with money.
Budgeting is a skill that anyone can learn. The
more you do it, the easier it will be to stay on top of your money.
Get started now by using our budget planner.
Last updated: 28 May 2015
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