Guide to Managing a Personal Budget

Do you find yourself living paycheck to paycheck?

According to Money Magazine, a staggering 86% of Australians are unaware of their monthly expenses. 

Learning to manage a personal budget is an effective first step in learning to manage your money better.

While setting up a personal budget sounds like it ruins the fun things in life, it’s actually very freeing. 

Personal budgets aren’t about not going out for dinner anymore.

It’s about helping you achieve your goals and reducing your anxiety and stress

Having a budget can help you pay off your debts or save for that holiday you’ve been dreaming of faster. 

Here is a simple guide to managing a personal budget.

Step #1 – Start Self-Monitoring

What gets measured will eventually get improved.

Woman holding calculator and writing on paper

Know your monthly income.

Then start tracking what you are spending your money on. Every time you spend, write it down or input it into an app. 

This isn’t about saying ‘no’ to yourself, it’s about getting to know your habits. 

Subtract these purchases from your income. This will tell you if you are spending more than you earn.

The immediate goal of a budget is to make sure you are spending less than your income. 

From here, you can assess your spending habits and see what changes you want to make.

Step #2 – Define Your Goals 

Everyone’s financial situation will be different. So are their goals.

These goals also shift throughout your life. A university student’s goals will be different compared to someone hoping to retire in 5 years time.

You need to figure out what your financial goals are. 

Wallet, phone, note pad, coffee and pencil writing up a budget

When it comes to budgets, you should be mindful of your short and long term goals.

Here are some examples: 

SHORT TERM GOALSLONG TERM GOALS
Rent / MortgageRetirement savings
Utility billsBuying a house
FoodPaying off debt
Car paymentsHoliday

Once you’ve decided what your goals are, assign an appropriate portion of your income towards these each month. 

Nerd Wallet suggests a 50/30/20 budget as a guide. There are other methods out there, so see what is right for you.

While short term and long term goals are different, they complement each other. 

According to the kitchen renovation team at Smart and Fast, saving for something like a house renovation can take months. “House renovations are something that can really affect your day to day life and is something worth saving for. Prices need to include both the cost of materials and labour, so keep this in mind during your day to day expenses and budget for it so there’s enough money set aside for it..”

Your daily expenses will eventually add up and affect your savings later down the line.

Step #3 – Choose A Budgeting System

Personal budgets are simply that. Personal.

Each person might choose a different way to set up their personal budgets. 

There are several different options:

  • Pen and Paper: The oldest budgeting tool that exists. This is pretty much free but involves a little math. Simply write down your monthly income and all your expenses to see if they balance.
  • Spreadsheets: By far, the most popular budgeting tool. In programs such as Microsoft Excel, information can be inputted organised clearly and the math done for you. There are lots of spreadsheet budget templates online to use.
  • Financial Software: Desktop programs and mobile apps are becoming more prevalent. These will automatically upload all your cashless spending into your personal budget. It will also do all the calculations for you. 
  • Cash Envelope System: This is the strictest method. The physicality of cash makes you less likely to part with it. This involves assigning cash amounts at the beginning of the month into marked envelopes and using only what is inside. 

Different things will work for different people. Decide which method you think will suit your personal needs. 

Step #4 – Set Some Guidelines

Once you’ve seen your spending habits and realised what your financial goals are, you can start implementing guidelines. 

This might mean bringing your lunch from home throughout the week instead of buying it. 

It might include buying new clothes less frequently.

Assess what you ‘wants’ and your ‘needs’ are. 

You might find that changing your habits won’t lessen your quality of life in the process.  

Knowing to say ‘no’ to small non-essential expenses more often means you’ll be able to say ‘yes’ to more important and exciting things in life, like travel.

World map with piggy bank, magnifying glass and calculator


Sydney Celebrant Fiona King notes that life events like weddings can be a financial goal. “Planning your own wedding can get very expensive. It’s always best to find people to work with that are within your personal budget in order to reduce the burden of this happy occasion later down the line in your day to day life.”

Budgets only work when you commit to them.

Step #5 – Keep Self-Assessing 

You should be assessing your budget every couple of months.

As your life changes, so will your goals.

In some instances, your financial situation changes. A promotion for instance means you will have a bigger budget to work with.

Emergencies that are outside of your control could crop up.

For the gutter installers at CM Roofing Services, sometimes unexpected expenses will arise. “Necessary yet unexpected expenses will arise. Something like replacing the gutter of your roof might prove an urgent significant expenditure. When you have budget provisions throughout your day to day life, being able to afford something unforeseen will be more manageable.” 

Always be mindful of your budget and don’t be afraid to change it as your life changes. 

Step #6 – Chat To The Experts

Sometimes seeking a financial planner is an option. These are experts in budgets that can help you get on top of your spending if you are struggling to reach your goals, such as a home remodel.

If you had a budget surplus and are thinking of investing, professionals have the advice. 

Getting on top of your money doesn’t have to be that hard. 

Simply defining your goals and prioritising them with a budget will help you get there faster. 

Creating and committing to a budgeting isn’t constricting. It frees up your life and your finances.

Get started freeing up your options now. Start your own personal budget today.

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