Less than half of Australians have a three-to-five year financial plan and only one in four have a long-term financial plan, according to ASIC data1.

With that said, the good news is it’s never too late to start. Making a small change now could mean a more secure financial future, a better retirement, setting up your kids, or just fewer money worries down the track. So, to get you started, we’ve put together an easy, stress-free guide to creating a budget and sticking to it.

1. Decide on a time frame

Budgeting is easiest when you’ve got a manageable timeframe to plan around. Usually, it’s best to build this timeframe around your paydays — whether they’re weekly, fortnightly or monthly.

2. Record your income and expenses

Your income and expenses are the two most important parts of your budget. A good place to start your budget planning is to record your income and expenses in a spreadsheet or consider using our budget planner calculator.

These expenses can generally be split up into three categories: 

  • Direct debits: expenses that come out of your account regularly such as rent, electricity, internet, council rates and strata fees, mortgage repayments and insurance.
  • Variable expenses: this is for stuff like cleaning supplies, petrol, public transport, lunch at work, doctors, food, after school care, haircuts, eating out and entertainment.
  • Future costs: next, consider the costs that sit outside your usual day-to-day spending. This can include car registrations and servicing, unexpected medical expenses, birthdays and Christmas, holidays and more. These expenses are the hardest to estimate and track, but do your best to remember and record as many as possible.

For help estimating your future expenses, it’s a good idea to look at what you’ve spent in the past.

To get started, log into your online banking account and review your last three month’s transactions, to make sure you include any quarterly bills.

What's left over ?

Once you’ve worked out your expenses and subtracted them from your income, what’s left over? If the number is low, zero or negative, then it may be a good idea to consider how you can reduce your spending so that you can make room for saving.

If you’ve got a little money left over then it’s time to figure out what to do with it.

3. Pay future-you first (and automate it)

It could be a good idea to set up automatic payments with the money that’s left over in your budget as soon as you get paid. These payments might go into a high interest savings account such as the Qudos Bonus Saver*, or other investments like shares or property. Anything that safeguards and grows your money for the future is a good idea (speak to a financial advisor if you need help figuring out where to invest or save your money).

Wherever your money goes, it’s generally a good idea to set up the payment to leave your account on the day that you get paid. That way, you’ll put your savings aside before you start spending, making it easier not to dip into them or skip a month when your expenses are high. Think of it as paying future-you before paying present-day-you.

4. Stick to your budget

Creating a budget is a great start but the most important thing is that you stick to it. Here are a few tricks to make that easier:

  • Reward yourself: you don’t have to eat tinned spaghetti with the lights off to budget successfully. You should make room for the things that you enjoy within your budget and spend guilt-free on things that truly improve your life (within reason). Budgeting is not about living like a Spartan — it’s about spending consciously and making sure you’re financially secure now and in the future.
  • Consider getting rid of high interest debt: high interest debt can make living within a budget difficult, especially when you’re getting charged a high interest rate. So, when you first start budgeting, it’s generally a good idea to make a point of paying off high interest debt such as car loans and credit cards.
  • Set goals: If you don’t have a good reason to budget, chances are, you won’t do it. Think carefully about what you want to achieve with your money, whether that’s going on your annual holiday, buying a home, buying a car (or all of the above). Whatever your goal is, use your regular savings to make a roadmap towards it, and all of a sudden, your budget will have a purpose.

5. Regularly review your spending against your budget

Sometimes life makes sticking to a budget difficult. You might have unexpected expenses, or accidentally spend a bit more than you intended — and that’s OK.

We’re all only human and managing your money can be hard. When this happens, the key is to look back and find out why you strayed from your budget and how you can avoid doing it again.

At times, overspending may be unavoidable, but by doing this you create a chance to learn and encourage yourself to spend more mindfully. After all, budgeting isn’t really about spending less or feeling guilty — it’s about figuring out how to spend your money in a way that improves your life, now and in the future.

1 FinancialCapability.gov.au



Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305. The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.