Making a budget

A budget is a plan you follow to make sure you only spend what you can afford.

Budgeting helps you make sure you have enough money for things like an upcoming phone bill or that concert ticket you’ve had your eye on. It also helps you save money for the big things you want later, like a car.

Learning to budget now will set you up for good money habits in the future. Here’s how to get started.

Understand where your money is going

Ever find yourself thinking, ‘where does my money go?’ As most purchases we make are online or using a card or phone to tap and pay, it’s easy to spend too much or lose track of where it’s all going.

The good news is all your spending habits are listed in your bank statement or in your banking app.

Read about getting a bank account and debit card

Read about bank statements

If you only have a few expenses, then a budget is very easy to just write down on paper or keep in your phone. But if you need help adding things up and dividing them, there are lots of budgeting apps and calculators that you can use.

Use a budgeting app or calculator

Many banks have budgeting tools on their mobile app and website. These are helpful because they are linked to your bank account and can show you where your money is going. Most apps will also let you set up multiple savings accounts and track progress towards your savings goals.

If you don’t have a banking app, you can use a budget calculator. This gives you a bird’s eye view of where your money goes, without having to do the maths yourself. Budget calculators ask you to fill in all of your money coming in (your ‘income’) and the things you need to pay for (your ‘expenses’).

Use the budget planner to see where your money is going and how much you spend on ‘needs’ vs ‘wants’.

Budget planner

Use this planner to see where your money is going and how you can save for something you want.

The 50/20/30 split

Another way to organise and manage your money is to use an easy ‘rule of thumb’: the 50/20/30 split.

These numbers stand for a percentage of your money. The idea is that whenever you get your pocket money or pay, you split the money up 3 ways.

These numbers are just a guide. You can change them to suit how much money you earn and what you need to spend it on.

50% on what you need to spend

Put half your money aside for bills and things you have to pay for. Examples of bills you might have are gym memberships, phone credit or public transport passes.

For adults this would usually cover all the household bills, mortgage repayments, groceries and transport.

While you may have fewer bills right now, it’s a good idea to still put aside half your money for them. This way you’ll make sure you’re never late to pay them. When people don’t pay their bills on time, they can end up in debt.

Read about dealing with debt and bad decisions

20% on what you want to spend later

One-fifth of your money should go into savings.

Savings are for things you know you’ll need or want to have in the future. By putting the money into savings straight away you can avoid spending it and if you use a savings account with an interest rate, you can even grow it.

Example of things you might save for are Christmas presents for family, a trip away with friends, or your first car.

Read about savings accounts

Use the ‘I want to buy or save…’ tool to work out the hidden costs of common purchases.

I want to buy or save...

We all want to buy things straight away, but sometimes there are hidden costs. This tool can help you think about what those costs are so you can make smart saving decisions.

Use the savings calculator to help you work out how much to save and how quickly you can reach your goal.

Savings calculator

Use this calculator to work out how long it will take you to save up for something you want.

30% on what you can spend today

This is the money you give yourself permission to spend on things you want now.

You can leave it as cash in your wallet or in your everyday bank account and access it with your debit card. You might spend it on games and festival tickets, personal luxuries like clothes and makeup, and going out with friends. Just make sure you’re only spending the amount you intended.

Read about getting a bank account and card

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