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Financial planning 101: How to put together a budget

by , 12 October 2015

Successful financial planning boils down to successful budgeting.

If you don't have a budget, you don't know what you're doing with your money. By putting a budget in place, you can spend your money more effectively and put more of it to work.

So how can you put together the perfect budget?

Read on to find out the four steps towards putting together a budget…


Budget planning step 1: Your income


Using a spreadsheet list all of your sources of income. Work this out over a weekly, monthly and annual basis.

This will show you where there are any ups and downs in your income. Plus the more accurate this is, the better your budget will be.

Income could include wages after tax, dividends and any other forms of income you have.


Budget planning step 2: Expenditure


Also using a spreadsheet, note down absolutely everything you spend money on. This includes all your bills, loan repayments, bond repayments, grocery shopping, takeaway coffees, swimming lessons for the kids, etc.

Anything you spend money on needs to appear here.

Make sure you include birthdays and other times of the years like holidays when you’ll spend more money.

Compare this to your income and see where you have shortfalls.


Budget planning step 3: Check your expenditure


For a month, keep a note of all your expenditure and reconcile your spending at the end of it. See where you could cut spending.

For instance, you may not have realised how much you spend on lunches or on things you don’t really need at the shops. It’s time to cut down on these.


Budget planning step 4: Work out your budget


Take your expenditure away from your income. See what’s left. This is the money you have to put to work for financial goals, investments and retirement.

You need to maximise this amount. You can do this by cutting costs and increasing your income.

So there you have it. How to put together a budget.

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Financial planning 101: How to put together a budget
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