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Creating a budget and sticking to it

It’s the dreaded ‘b word’: budget. But while a surprisingly large number of Australian homes don’t have one, creating and sticking to a realistic budget isn’t that hard.

While people know a budget can help them keep track of their money, they also often associate a budget with ‘missing out’. But that needn’t be the case. It just takes a bit of work upfront and then the benefits become obvious.

Where to start

Firstly, you’ll need to make a list of all your expenses. When doing this, try to be as detailed as you can, and be honest with yourself. Gather all of your bills, credit card and bank account statements, and receipts for a set period of time – perhaps a fortnight or a month. Don’t forget to include things like clothing, entertainment, gym and sporting memberships and petrol.

Then add up your list of expenses and deduct it from your income – remembering to include in your income things like any dividend payments, government benefits or rental income, along with your salary. From here you’ll be able to see where you currently stand. If your income outweighs your expenses, well done! You can choose to do what you like with the extra money – maybe put it into savings or super, or invest it.

If you’re left in the negative (like many of us) you may need to look at your spending to see where you can save. This is the tricky bit, where you have to prioritise your spending and look at the absolute essentials, so you can try to balance the books. Again, this doesn’t have to be about missing out, but more about compromising.

Useful budgeting tools

Some people like to use spreadsheets, which are fine, but can be labour-intensive. Alternatively, there are plenty of simple-to-use tools available now that can make things really easy, and help you create then stick to your budget. Some to look at include:

Ultimately, creating a budget is about helping you get a better picture of your money and then getting into (and staying in) positive financial territory. So if you’re serious about sticking to it, you’ll find a way to make it happen, and then the benefits should start flowing in soon after.