7 tips to help you sort out your budget

Sorting out your budget doesn’t have to be a daunting task. In fact, with a few practical tips and realistic strategies, you could gain control over your finances and pave the way for a more secure financial future. 

 

Whether you’re looking to save money, pay off debt, or just get a clearer picture of your financial health, these seven budgeting tips may help guide you through the process. 

 

1. Be clear on why you’re budgeting

Before diving into spreadsheets and calculators, take a moment to get crystal clear on why you want to sort out your budgeting.

 

Are you building an emergency fund? Saving for your dream holiday? Getting control of your overspending habits? Perhaps you’re looking to reduce your financial stress?

 

Whatever the reason, chances are you’ve heard about the importance of budgeting. But are you clear on why budgeting is important for you?

 

Think of a budget as a map or a personal GPS that can help you get from Point A to Point B, and get you back on track if you get lost along the way. Setting up a budget may help guide you towards achieving your financial and lifestyle goals, enabling you to make considered choices about how you spend your money.

 

It could help you allocate your spending for essential living expenses while working towards  goals like saving for retirement or buying a new car.

 

To motivate yourself to try this new money habit, try completing the following sentence “if I create and stick to a budget, I will be able to….”

 

Before crunching the numbers and allocating funds, clarify your financial objective to ensure that every budgeting step you take has purpose. 

 

2. Track your spending

Budgeting is going to be a tricky task if you’re not sure where your money’s going. Taking small manageable steps can help you to develop a new behaviour or habit.

 

To help you get started with budgeting – try tracking everything you spend for a short period of time. Why? It can give you insights into how you spend money  and may highlight how spending even small amounts of money all adds up over time.

 

It may also reveal those areas of spending that otherwise go unchecked, such as paying for subscriptions to multiple digital streaming services that you may not be using.

 

Record your spending in a way that best suits you. For example, you could record your spending digitally or on paper, tracking where your money goes. Tools such as the Westpac budget planner can run the sums to let you know exactly how much money you have left over after you've entered all your income and expenses.

 

By looking at your income, one-off and fixed expenses, you’ll be able to work out where your money is going and if you’re spending more or less than you can afford.

 

Bank statements can also help with the budgeting process. The Westpac mobile app budget tools can help you analyse your spending, follow your ins and outs, track your spending habits each month, and identify savings opportunities. There are over 20 important categories, ranked by spending, so you get a big picture view of where your money’s going. 

 

 

3. Pay yourself first

Regular saving is one of the most powerful things you can do to become more financially resilient and help you achieve your lifestyle and financial goals. One way you might approach this is to pay yourself first. In other words, save first and then spend.

 

By prioritising your savings as a non-negotiable expense, you establish a foundation for future financial security. Plus, paying yourself first allows you to work towards short-term goals, such as creating an emergency fund, and long-term objectives, such as retirement savings.

 

Allocating your savings into a dedicated savings account to keep it separate from your spending money may be a good idea. For example, Westpac offers a savings account which allows you to split your savings into different goals, so you can bucket your money in up to six different goals with just the one account.

 

 

4. Plan for unexpected expenses

Some people call it ‘saving for a rainy day’, but of all the budgeting tips, one thing to plan for is unexpected expenses. Unforeseen events such as medical bills, car repairs or a sudden job loss might arise at any time.

 

Creating a buffer for unexpected expenses in your budget could provide a financial safety net to help you weather some of these unplanned events without disrupting your overall financial plan.

 

An emergency fund doesn’t need to continue to grow. Choose an amount that will cover your lifestyle and an allowance for mishaps and once you have that amount set aside continue to save for your other goals.

 

 

5. Review regularly

Reviewing your money on a regular basis is vital. By consistently assessing your income, expenses and savings, you may gain valuable insights into your habits as well as identify areas for improvement.

 

This approach allows you to adapt your budget to changing circumstances, like salary adjustments, unexpected expenses, or shifts in financial goals and helps you make informed decisions that align with your long-term financial goals.

 

6. Create separate bank accounts for different purposes

Creating  bank accounts for specific purposes is a good idea when it comes to your financial wellbeing. By compartmentalising funds into distinct accounts, you could manage your money with greater control and visibility.

 

For example, you might want an easily accessible bank account for everyday spending and expenses, a savings account for short-term goals, and a savings account for long-term goals.

 

Some savings accounts offer a bonus introductory interest rate, so it’s worth looking at the benefits of different accounts to find one that best suits your purpose.

 

For long-term saving, a term deposit could be a good idea if you want a fixed return on your investment over a set period. A Westpac term deposit allows you to choose a term from one month to five years, knowing your money will be invested securely over that time.

 

Separating your money into different accounts also can help establish clear spending limits, prevent unintentional overspending, and give you a clear picture of where your money is allocated, making it easier to track progress and identify areas for improvement. 

 

 

7. Reward yourself

Saving and sticking to a budget shouldn’t be a chore. You may want to recognise and reward yourself with small feelgood incentives along the way to keep yourself motivated.

 

Celebrating milestones can help to reinforce your behaviour and make the journey towards achieving your financial goals more enjoyable and sustainable.

 

Your rewards don’t need to be extravagant – you don’t want to undo all your budgeting hard work – but could be a small treat, a leisure activity, or even a moment of relaxation to make the process of budgeting and saving a positive and fulfilling effort!