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How to Write a Budget You Will Stick to

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Find out how to put together a monthly household budget without losing your patience halfway through.

There's a difference between writing a budget that you'll follow and a budget that will end up in the too hard basket. We've all heard how vital a budget is for financial success, but it's easy to lose sight of this when the boredom of tracking expenses sets in. Here we look at tips and strategies for creating a budget the easy way.

1. Use a budget calculator

Choose a good online budget planner, and you'll find it significantly cuts down the time it takes to record your income and expenses. Instead of trying to think of all the ways you earn and spend money, the calculator should guide you through the process.

The Yellow Brick Road mortgage calculator breaks expenses into categories like household, personal, debts, insurance, savings and transport, with a wide range of bite-sized options in each category. For example, when recording your transport expenses, there are fields for car registration, parking, fuel, repairs and maintenance, public transport and fines. These can be entered using any combination of frequency, from weekly through to annually, which makes it straightforward to cut and paste figures directly from your bills.

Hit the 'calculate' button, and the budget calculator will take this data and let you know if your expenses are greater or less than your income. The completed spreadsheet, which can be printed or emailed, is your reference as to how much you can afford to spend. If you’re spending more than you earn, go back and review your expenses to see where you can cut back.

2. Don't get stuck on personal spending

It's never easy to calculate how much you spend on variable personal costs like clothes, shoes, haircuts, holidays and entertainment. It might end up being such hard work that you feel tempted to abandon your budget planning altogether.

A hack to overcome this hurdle is to leave the ‘personal spending’ section of the budget until you’ve filled out all the other parts, including income, fixed spending and savings. Once these figures are calculated, you can see what is leftover. Now allocate the shortfall towards these variable personal expenses. 

Take the first step

3. Use automation

Your budget should be fine-tuned regularly to account for any changes to your finances.

It's always a good idea to be sure that your budget is based on actual expenses, not guestimates. Use a smartphone expense tracker app to note your spending over a set period, such as 30 days.

Choose an app that makes this task easy to accomplish. Some apps like ASIC's TrackMySPEND, ask you to add new expenses on the go by putting in the expense name, amount and category. Others are linked to your credit or debit card, so can automatically categorise most expenses. Find the method that works for you.

Your budget should be fine-tuned regularly to account for any changes to your finances. If you continue to track your expenses, it will be considerably easier to adjust your budget to reflect your income, spending and saving goals.

Be sure to track every little cost, no matter how small or infrequent because it gives a more accurate picture of your spending. Even though a few dollars here and there might not seem like much, they can add up over time.

4. Add in wiggle room

When recording your spending in each category, add in a small buffer. Do this with all your expenses. Now you have a little bit extra at the ready. It means you're covered should an unexpected expense arise, and you won't feel guilty when you want to have the occasional treat.

5. Keep your goals in sight

Know why you want this budget. Maybe you’re paying off credit cards, saving for a holiday or buying a new car. Whatever your goal, use it to keep yourself motivated to save money and stick to your budget plans. 

**The information on this article contains general information and does not take into account your personal objectives, financial situation or needs. If you require further information don’t hesitate to contact the branch directly.

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