Budgeting is the foundational step in personal finance. Knowing where your money is going is essential to improving your finances over time. Budgeting allows you to control your money, giving you a clearer idea of your income and actual expenses. It is often the first step on the way to achieving your financial goals.

Managing your money

Get a clear picture of your regular expenses, including when they’re due, and your spending habits.

Try to set aside money for emergencies.

See where you can save, and start saving — no amount is too small.

Prioritise high interest debts

Set money goals to help you to decide where you want your money to go.

Are you reliant on debt to make ends meet? This would be considered financial hardship. Contact the National Debt Helpline on 1800 007 007. If you need help managing your money, contact a financial counsellor.

How to Create a Budget

An easy to use budget tool is available for free at MoneySmart.gov.au. Use how often you get paid as the timeframe for your budget. For example, if you get paid weekly, set up a weekly budget.

Follow these steps to create your budget.

1. Add up your income

Record how much money is coming in and when. If you don’t have a regular amount of income, work out an average amount over the year, and divide by 26 for fortnightly, or 52 for weekly, etc.

Make a list of all money coming in, including how much, where from, and how often (weekly, fortnightly, monthly or yearly). Include everything you receive.

2. Record all your expenses

Record your regular expenses, including what for, how much, and when. Don’t forget to include ‘one-offs’ like holidays. Make sure you have a really accurate picture of your cost of living. You may wish to use a spending tracker or budgeting app to do this. Examples of your expenses would include:

Source: MoneySmart.gov.au

3. Work out what you can save

Putting some money aside for an emergency fund is an important first savings milestone. Start with one month’s living expenses, and grow from there.

If your first draft budget is in the red, don’t worry. For many people this is the case the first time they go through this process. Just keep revising and refine, reducing discretionary expenses and costs until you can balance your budget.

4. Decide what your spending limit will be

What ever remains after your expenses have been paid is your surplus. You’ll need to decide what portion of this you will save, and what to spend. The more you spend, the less can go toward your financial goals, whatever they might be.

Set a spending limit on yourself. This money is for ‘wants’, such as entertainment, eating out and hobbies. You should probably have a separate bank account for your spending money so you don’t accidentally overspend.

5. Review your budget regularly

You need to keep an eye on your budget so you can adjust along the way. If you’re having trouble paying all your bills, you may need to adjust your spending limits or savings plans.

For ideas to help reduce spending, see the MoneySmart article on simple ways to save money

How to set Budget Goals – from r/ukpersonalfinance

Set goals for each spending category, but make sure your goals are SMART

Specific – Ensure you are stating specific goals. Example: “I will cut my restaurant budget by 25% this month.”

Measurable – You need to have a way to measure success or failure. With money, this is usually pretty easy. The example above is measurable – if you normally would spend $100 on restaurants each month, spending $75 or less is success.

Achievable – If you decide “I will stop spending on restaurants entirely next month” when you have three family birthday meals to attend, things are not likely to go well. Make the goal achievable instead: “I will aim to reduce my restaurant spend by 25% next month”.

Relevant – This may seem obvious, but if you’re setting budgeting goals don’t get off-track. Reducing your spending on lunches at work may be relevant, but deciding you will make these lunches more healthy belongs in a fitness goal, not budgeting.

Time-bound – Hold yourself accountable by setting a deadline. Goals with fluctuating or indefinite time frames don’t help you.


The MoneySmart Budget tool is a great place to start.

There are dedicated budgeting apps and services available, such as MoneyBrilliant, YNAB, and PocketBook.

r/ausfinance member and redditor u/compiledsanity has created an amazing and free net-wealth, investment tracker, and budget and wealth tool in google sheets that can be accessed here. You can read more about this tool from the original post here.

User-created spreadsheets can be adapted from r/personalfinance’s tools wiki page.