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How to create a budget | Perth Finance Broker | Argent Finance

If you want to feel in control of your money, curb unnecessary spending or save for something special, or all of the above, creating a budget is crucial.

An effective budget will allow you to plan, keep track and help you feel in control. Yes, creating a budget isn’t exactly the most exciting activity, but you will be grateful that you did it.

So, how do you create a budget exactly?

The Perth Finance Broker team at Argent Finance, are here to share 5 budget creation tips.

Track your expenses

 Do you ever get to the end of the month, find all your money is gone and have absolutely no idea where it went?  – You’re not alone.

This is why, before creating a budget, you need to first track your expenses. Track your expenses for at least a month – this will help you understand your real spending habits.

Tracking your expenses is by far the easiest way to determine where all your money is going and where you may need to cut back. Ensure you track all your expenses too, not just the substantial ones.

How do you track them? There are a range of Apps to help and MoneySmart has some great tools and resources too.

Another tip: Download your bank transactions for the last year to help you see where your money has been going.

Calculate your expenses

Once you’ve tracked your expenses, you need to begin calculating them.

Your expenses should be categorised and calculated as follows:

  • Fixed Expenses – Essential items such as rent, mortgage, household expenses such as groceries and utility bills.
  • Debt – Debt such as a personal loan, business loan, car finance or credit card repayments
  • Unexpected Expenses – These expenses usually pop up when you least expect it, such as car repairs and medical bills.
  • Savings – Set a savings goal and work out much you can afford to save, whether this be for emergencies, your home deposit, or something else.
  • Budget Buffer – This isn’t to be confused with your savings. The budget buffer is reserved for small flocculation’s in your money. We all make mistakes with our money, particularly when we start budgeting, so this buffer is for any ‘accidental spending’ during this time.

Base your budget on your pay cycle

We’re all paid on different cycles and your budget should be based on yours.

For example, if you get paid fortnightly, your budget should be fortnightly. All your expenses, whether they’re weekly, monthly, quarterly or yearly, need to be broken down to fit your pay cycle – whatever that may be.

Set up multiple bank accounts

Is all your money in one bank account? This can get confusing and messy.

To avoid potential confusion and money mess, we recommend you set up multiple bank accounts for different purposes. How many bank accounts you have is completely up to you and your personal circumstances.

Your bank accounts may look something like this:

  • Savings account
  • Spending account
  • Bill account
  • Buffer account

You could even get really specific and rename your savings account ‘home deposit’ for example.

If you’re a business owner, you may need even more, such as one for business expenses and another for tax savings.

Review your budget regularly

Life happens, things change and so can your budget. So, it’s important to review your budget regularly and adjust it if and when you need to.

If you find you can’t cover all your expenses, savings and spending, you may have to reduce your spending limit, or change your savings goal.

With a budget and these tips combined, you’ll be well on your way to achieving your financial goals.

How your Perth Finance Broker can help

Do you need help with your finances?

At Argent Finance, our Perth Finance Brokers aim to save our valued customers time and money with access to a number of specialised personal loan providers offering very attractive fixed interest rates.

Our personal loans are personal, just like you.

Contact Argent Finance today to see how we can help you.