How do I prepare a budget?

Step 1: Track your spending

Keeping track of how much you spend for a couple of weeks will help you learn where your money goes.

You can:

• jot down expenses in a notebook or spreadsheet
• look over bank statements, regular bills and receipts
• use an online tool such as the Moneysmart Budget Planner
• download a budgeting app to your mobile phone – visit the App Store or Google Play to see what is available
• check if your bank has a budget planner included in their app or on their website.

Step 2: Choose a time frame

Decide if your budget time frame will be:

• weekly
• fortnightly
• monthly
• yearly

It can be helpful to choose the time frame that matches your pay period.

If there are expenses you only pay once a year:

• divide by 52 to work out the weekly cost
• divide by 26 to work out the fortnightly cost
• divide by 12 to work out the monthly cost.

Step 3: Write down your income

Your income is all the money you have coming in.

Examples include:

• take-home (after tax) pay and bonuses
• income from investments, shares or property
• government benefits, such as Centrelink payments
• child support payments
• repayments from anyone who owes you money (debtors)
• any other income.

Step 4: Write down your expenses

Your expenses are all the things you spend money on.

Examples include:

• housing – rent or mortgage, council rates, strata fees
• food, groceries, alcohol
• loan repayments – car loan, personal loan, credit cards
• utilities – electricity, gas, water, phone, mobile, internet, pay TV, streaming services
• insurance – home and contents, car, private health, life
• health – medical, dental, optical
• transport – petrol, registration, repairs, fares, parking fees
• education – child care, school fees, uniforms, textbooks, HECS–HELP repayments
• clothing and shoes
• personal care (e.g. haircuts)
• entertainment, holidays, gifts
• child support payments
• unpaid fines
• incidentals (pocket money)
• memberships (e.g. gym, clubs).

Step 5: Work out the difference

To work out the difference between your income and expenses:

• add up all your income (Step 3).
• add up all your expenses (Step 4).
• take away your expenses from your income.

If you spend more than you earn, that is, your expenses are greater than your income, see if there are ways you can increase your income or reduce your expenses.

Once you have prepared your budget, review it regularly, as your income and expenses may change.

Moneysmart, a Federal Government website, has more information on how to prepare a budget.