As you become an adult, the number of expenses you have increases, and it’s not always proportional to the amount of money you’re earning. Because of this, you may be struggling to save money or keep track of your expenses.
If this is the case and money struggles are living rent free in your head, you should create your own budget – we promise it’ll make life a little bit easier!
Read below to find out what a budget is and the best tips for creating and maintaining a successful budget.
What is a budget?
A budget is a system that keeps track of how much money you have (e.g. your income), where the money must go towards (e.g. bills) and if you have any leftover to treat yourself or put towards your savings. It is a plan that ensures you’re putting your money where it is most needed and managing it well to make sure you can afford to fund your desired lifestyle and set achievable savings goals.
Tips for creating & maintaining a budget
Calculate your income & expenses
To begin your budget, it is vital that you make note of your weekly, fortnightly or monthly income. This way you can keep track of how much money is coming in before you divide and allocate your spending between necessities, wants and savings. It is a good idea to automate certain expenses such as bills and rent so you can easily see your surplus funds after necessities have been paid for.
Expenses to consider in your budget may include:
- Bills for electricity, internet, phone, and water
- Car costs such as registration, fuel, and maintenance
- University fees
- Medical bills or health insurance
Note: If the cost of your essential expenses exceeds your income, you may have to decrease your expenses or make more money by finding a second job or starting your own business.
Decide what timeframe you will use to budget
When starting your budget, it is important to base the plan on a specific timeframe (and stick to it!). This timeframe will most likely be how often you get paid, whether that be weekly, fortnightly or monthly.
Set a reminder in your phone, email or online calendar to check in at the end of the agreed time period and track how your spending is going.
Set a realistic budget
To ensure your budget is successful, it is important to make it as realistic and accurate as possible.
Here are some tips to maintain a realistic budget:
- Set appropriate goals that you’re likely to achieve – don’t plan to make a big purchase in a year if your funds aren’t sufficient
- Automate your bills and rent so you don’t spend that money on other expenses
- Always allow for unplanned expenses such as car repairs or hospital bills
- Stay motivated by treating yourself occasionally
- Make sure you’re living within your means – consider whether you really need something when making a big purchase and avoid making lavish purchases to “keep up” with peers on social media or unrealistic lifestyle expectations.
- Avoid using Afterpay – this can lead to debt and will be harder to manage in your budget!
Monitor it regularly and adjust if need
You should monitor your budget at the end of each cycle – aka the timeframe you based your budget on. Monitoring it regularly allows you to see if the budget is working, if your goals are being met and if you’re able to afford your expenses with the income you’re receiving.
As your budget is based on your current lifestyle, you will need to continuously adjust it. If your income increases/decreases or your expenses increase/decrease, you will need to make the relevant changes to your budget to make it realistic and accurate to your present situation.
Now, it’s time to start your budget. There are so many budgeting templates and apps to use so you don’t have to start from scratch – help is on the way dear!
If you want to use a template on your computer, we recommend using money smart’s budget template here.
If you would rather have a budgeting app on your phone, some great ones are Raiz, Pocketbook, Money Brilliant and Frollo. Your banking app will also have a spending tracker feature.
You may need to try out different apps or methods to see what works best for you. Different systems will work for different people, and you’ll find your budget is easier to stick to when you use what’s right for you.
There are so many different budget tracker apps, but you can always go old-school and use an excel spreadsheet or notebook if that’s what works best for you!
For tips on how to save money in your 20s, click here!