Managing your money

  • Planet Wealth
  • July 8, 2020

Budgeting in plain English

What is a budget?

A budget is a plan that works out how you will manage your income and expenses. Maintaining a budget is a powerful way to control your money.

Do you need a budget?

A budget allows you to see how much money is coming in and going out. It helps you ensure there is enough money to cover your expenses and is an effective way to make sure you are not spending more than you can afford. More importantly, a budget can help you work out how much of your income you can put towards saving for your future, without impacting your everyday needs.

Everyone can benefit from having a budget. The purpose of a budget is not to make you go without or to force you to save. It simply allows you to manage your money in a more controlled and effective way and to understand where you are spending your money.

How do you start a budget?

Write down your normal income and expenses over the period of a month. Income can be grouped into categories such as work and income you receive from investments or other sources. Similarly, expenses can be grouped into categories such as food, clothes, entertainment and so on. This makes it easy to see exactly where your money is being spent.

 

A budget can help you decide what you want to spend your money on, and how much you can save.

Making your budget work

This step-by-step guide will help you build a budget that works best for you. If you have combined expenses with a partner, it is important that you work it out together.

Sticking to your budget

Be realistic

If your budget is too strict, it will be harder for you to stick to it.

Spend less than you earn

If you have a cash deficit, review your expenses and cut back where you can.

Include your goals

If you are planning an expensive holiday (or other savings goal such as home renovations or a new car), include these expenses in your budget and start saving.

Review your progress

Check how much is left in the bank each month and how much you have spent. Compare this with your budget to see how you have fared. If your budget differs from reality, you may need to make some adjustments.

Reward yourself

Managing your money in an effective way takes practice. When you are comfortable that your budget is accurate and you are able to stick to it, reward your hard work and treat yourself!

 

What if the unexpected happens?

Life always has a way of throwing us surprises. The financial consequences of these should not be understated. Try to keep a buffer in your budget so that when this does happen you will be able to minimise any financial strain.

Remember, if something does happen that turns your budget upside down – don’t panic. Staying calm and working out how to manage unexpected circumstances is the best way to regain control of the situation

Getting Expert Help

We can work with you to create a customised plan to and budget that work for your specific goals

Talk to us today

Planet Wealth Pty Ltd (ACN 137 467 362) as Trustee of the Planet Insurance and Financial Planning Unit Trust ABN 15 757 194 605 is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.

Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your advisers, our practice, AMP Financial Planning, its associates and other companies within the AMP Group may receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details. If you no longer wish to receive direct marketing from us please call us on the number in this document and if you prefer not to receive services information from AMP, you may opt out by contacting AMP on 1300 157 173. To view our privacy policy visit www.amp.com.au

Planet Wealth

About Planet Wealth

Planet Wealth has been providing expert financial advice for over 10 years to individuals, families and businesses. Our expert advisors work closely with our clients to develop exceptional financial strategies and financial maps that benefit our clients.