Ever wondered where all your money goes every week? Regardless of whether you’re living at home. Or plan to move out of home soon, creating a budget is an effective (and proven) way to manage your money.
In this short article, we’ll take you through some simple budgeting tips. We’ll introduce you to good habits you can start practising today and use for the rest of your life. So, find a quiet space, grab a notebook and pen, and let’s get into it.
What is a budget?
A budget is a spending plan. Knowing exactly where your money goes is the first step to budgeting. By tracking your income and expenses, you’ll get an accurate picture of where your money is going. For example, you might go to Maccas a couple of times a week. Or you might buy clothes online. But then you never seem to have enough money to cover your mobile phone credit – sound familiar? A budget helps you to determine your priorities. It also enables you to make small changes to your spending habits that can make a big difference.
How to track your income and expenses
Managing your money doesn’t have to be complicated. Whether you’re earning a little or a lot, knowing exactly where your money comes from – and where it goes – is the first step to taking control of your finances. This quick exercise will help you get a clear picture of your weekly income and expenses. You can do it several ways but we’re going to look at two. Better still, it’ll only take you about 10 minutes.
Option One: A simple way to understand your budget
All you need is a notebook and pen. By the end, you’ll be able to see if you’re living within your means, or if it’s time to make a few small changes that could lead to big savings over time. Start with step 1 – draw two columns.
Step 2: Income
- Write “Income” at the top of the left column.
- List all sources of weekly income (e.g. casual work, Youth Allowance, Austudy, parental support).
- Write each source on a separate line with the dollar amount.
- Add them up to get your total weekly income.
Step 3: Expenses
- Write “Expenses” at the top of the right column.
- List everything you spend money on during the week – mobile credit, food, entertainment, online shopping, vehicle, etc.
- If you have annual expenses like car insurance and registration, divide these by 52 to get a weekly cost. You’ll need to factor this in as a savings plan.
- Include even small purchases (like a takeaway coffee), each on a separate line with the amount.
- Add them up to get your total weekly expenses.
Step 4: Compare
- Subtract expenses from income.
- If your expenses are higher, look for areas to cut back.
- For example, skipping one $5 coffee a week saves you $250 a year.
Option Two: Try a budgeting app.
You can go through exactly the same exercise as option one using a budgeting app. If you’re someone who likes using a computer, then you may find this works best for you. Better still, you’ll find plenty of free budgeting apps in the Apple and Android stores and on the internet.
A budgeting app can automatically track your spending. It can sort your spending into categories like groceries, online shopping, entertainment, and so on. This can make it easier to spot patterns of spending (i.e. impulse buys) that can blow your budget.
Thinking of moving out of home? (Start budgeting now)
Moving out of home is an awesome time in your life. You’ll have more independence, more freedom, more choices (and you guessed it, more expenses).
This is where budgeting can make your life so much easier. Whether you’re in a room of your own on campus, or in a share house, there’ll be a lease agreement you’ll need to sign for your accommodation. This could be a couple of hundred dollars a week. There could also be a bond, which is a security deposit paid to the landlord – this could be another couple of hundred dollars.
On top of this, you’ll have shared expenses and bill splitting. For example, you’ll be expected to contribute to groceries, toilet paper and cleaning products. You’ll need to pay your share of the electricity bill, and so on.
These expenses never go away. They’ll keep coming around every month or so. This means you’ve got to make sure you have the money to pay for them.
Again, the best way to manage all these expenses is to budget.
Budgeting helps you stay on top of regular accommodation and shared living costs like rent, bond, bills, and groceries—making life easier, reducing stress, and ensuring you’re always prepared for monthly expenses.
Tips for buying groceries on a budget
Have a plan of attack. Before heading to the shops, make a list of the meals you’d like for the next few days. This will help you to avoid impulse buys (i.e., things you don’t need) and to only purchase the items you’ll need.
Also, look for the specials at supermarkets. You’ll find all sorts of discounted items, which can be reduced by up to 50% (just make sure you check the use by date).
Another great tip for reducing your grocery bill is to eat and drink what’s already in the fridge. Instead of throwing stuff out, think about making soups, quiches and delicious smoothies (it’s fun, it’s healthy and it’ll save you a fortune).
Buying second hand doesn’t mean it’s second best
Setting up a share house doesn’t need to be expensive. You’ll find all sorts of practical second-hand items at local charity stores, and online sites like Marketplace and Gumtree. This includes clothes, furniture, crockery, tools, plants and more. These items will often be in great condition, and they’ll be a fraction of the cost of buying new items.
An Emergency Fund will give you peace of mind
Life has a way of throwing curveballs when you least expect it. Maybe your car breaks down, or your casual job comes to an abrupt end. Maybe your wisdom teeth need to come out!
When something like this happens, you can find yourself in financial trouble. This is where an emergency fund can come in handy.
An emergency fund is like a financial safety net. It can be set up as a separate account that you have with your bank. For example, you might decide to contribute $50 a month, which can build to a few thousand dollars over time (how much you decide to keep in the fund is up to you).
The grim alternative to having an emergency fund is maxing out your credit card. Or you might end up borrowing money from friends, and then spiralling into debt (not much of an alternative, is it?).
Always remember, an emergency fund is money set aside for an ‘emergency’ only (and it’s the best money you’ll hopefully never spend).
An emergency fund is a smart way to stay financially secure. Saving a little regularly helps you handle unexpected costs without debt – protecting your future when life takes an unexpected turn.
What’s next? Putting your budget into action
Now that you’ve learned the basics of budgeting – from tracking your income and expenses to planning for emergencies – you’re in a great position to take control of your money. Whether you’re still living at home or preparing to move out, these simple habits can help you avoid financial stress and build confidence in your money decisions.
Start small. Choose one budgeting method – pen and paper or an app – and give it a go for a week. Review your spending, look for patterns, and see where you might be able to save. Even small changes, like cutting back on takeaway or shopping smarter at the supermarket, can make a big difference over time.
And don’t forget, budgeting isn’t about being perfect. It’s about being aware, making informed choices, and setting yourself up for success – now and in the future.
Key takeaway
By cutting back on the smaller ‘little luxury’ purchases, you’ll save more money. This doesn’t mean going without – it means being smarter with your money.