Elements of a good budget

Revolutionise your budget with these top tips.

29 January 2016: Budgeting is not fun, but it’s necessary. If you get it right from the start, a household budget could be your greatest ally. Building a budget will put you on solid ground when it comes to growing your savings.

Creating a budget is easy when you keep the following tips in mind:

Seven elements to a great budget

Plan and be comprehensive

A budget is your blueprint to financial success. Be ready to set aside some time and focus on creating a budget that suits your lifestyle. This won’t take five minutes, unfortunately. You have to know all the categories of your saving and spending so you can make the most out of your budget. Work out how much income you receive and what you spend it on. Be thorough. Look through past bills and work out how much you’ll need to set aside for next time. Leave no stone unturned.

Know how much you make

This goes without saying. If you don’t know how much you make, how could you expect to plan a budget? To make an accurate spending plan, know your exact income figure after tax. The Australian Bureau of Statistics (ABS) estimates the average weekly income of full-time employees is $1,484.50 as of May 2015. Your income could be higher or lower than this. Gather your payslips and other forms of income like dividends if you have shares and come up with a total income figure.

Set realistic goals

The key word here is “realistic”. Many people try and make unrealistic budget goals and inevitably fail. It’s important note your goals both the short term and long. Having both will keep you motivated to stick with your budget. If your long-term goal was to buy a car, your short-term goal might be to save $1,000 every month. This way, you are motivated to achieve your realistic short-term goal as it works towards your long-term goal.

Learn to be flexible

Your budget is dependent on the economy. If prices increase, you will have to adjust your budget to accommodate the change. Likewise, if your priorities or income level changes you will need to be flexible so your budget won’t fall to pieces. A budget should not be a rigid, controlling tool. Each month will be different so allow yourself to be flexible. Plus, having a budget that isn’t set in stone will make it more enjoyable.

Grab a buddy or an app

Have you ever tried playing cricket on your own? It’s extremely hard to be the bowler, the batsman and fielder all at once. Similarly, doing a budget on your own will be hard and certainly not fun. Having a buddy makes it easier to stay on track. If you don’t have a budget buddy (or don’t want one) get an app that helps you keep track of your spending. Unless you want to do all the calculations manually, an app could really benefit you. Today’s technology makes life easier. Apps can review all your expenses and compare it with your income and it will give you tips to improve your finances at the end of each month.

Learn from your mistakes

If you are new to budgeting or if you’ve had years of experience, you are going to make a few mistakes. It happens. Don’t stress about it. It’s perfectly fine to make some amendments. Your budget evolves and will need some work but that all comes with being flexible. With a bit of practice and time, budgeting will get easier.

Get some professional help

If you can’t make it out of struggle street, try getting some professionals to help you. Financial planners will help you create a clear and easy-to-follow budget which reflects your financial needs and goals.

There you have it – the best tips for creating a successful budget. It’s no secret that budgeting is important and applies to all of us regardless of financial status or spending habits. These steps will help you achieve your financial goals.

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