Creating a budget.

3 Step Guide.

A budget is a plan for your money. It helps you figure out how much money you have coming in and how much you're spending. By creating a budget, you can decide where your money should go, like paying bills, saving for things you want, or setting aside money for emergencies. It's like a map that helps you manage your finances and make sure you're using your money wisely.

The 3 Steps are:

  1. Read the Setting Sail Overview

  2. Download our free budget template

  3. Continue to refine and reassess

Image of a tablet setting a budget with various items on a table

Step 1.

Read the Setting Sail Overview

Learn how to manage your money by understanding your debt and expenses, assessing your income, organising your insurance, setting financial goals, working towards those goals, and regularly reviewing your progress.

IMPORTANT TO NOTE

Creating a budget may not top the list of thrilling activities for many folks, and I totally understand that sentiment. Yet, it serves as the fundamental cornerstone for understanding your current financial position and navigating towards your desired destination. While various online tools and apps exist to assist in budget creation by analysing spending habits, I personally recommend using Microsoft Excel or Apple Numbers. These apps allow you to craft a budget that can be easily updated and revisited as needed. Over time, my own budget has evolved continually, as I gain a clearer understanding of my expenses (anchors), income (sails), and the course I'm charting towards my goals.

Step 3.

Continue to refine and reassess

Creating and setting a budget is never a set-and-forget exercise. Consistently, review your budget looking to refine your income, expenses and savings goals. Use it to understand what expenses might be unnecessary. Create a version to track your progress over time. For example, ‘My Money Budget - January 2025’ - will allow you to see how things have changed over time.

Here are some tips to help along the journey.

  • Begin by calculating your total monthly income. This includes your salary, any additional sources of income, and any consistent financial support you receive.

  • Keep track of all your expenses for at least a month to understand where your money is going. This includes fixed expenses like rent or mortgage payments, utilities, groceries, and transportation, as well as variable expenses like entertainment, dining out, and shopping.

  • Categorise your expenses into needs and wants. Needs are essential for survival and maintaining your lifestyle, while wants are things you desire but are not necessary. This will help you prioritise your spending and identify areas where you can cut back if needed.

  • Determine your short-term and long-term financial goals. Whether it's paying off debt, saving for a holiday, or building an emergency fund, having clear goals will give your budgeting efforts purpose and direction.

  • Once you have a clear understanding of your income and expenses, allocate your income towards different categories based on priority. Start with covering your needs first, then allocate money towards wants and savings goals.

  • Make sure your budget is realistic and sustainable. Don't set overly ambitious goals that you won't be able to stick to. Be honest with yourself about your spending habits and set achievable targets.

  • Your financial situation and priorities may change over time, so it's essential to review your budget regularly and make adjustments as needed. Be flexible and willing to adapt your budget to accommodate any changes in your income or expenses.

  • Keep track of your spending and compare it to your budget regularly. Use budgeting tools or apps to help you stay organised and monitor your progress towards your financial goals.

  • Stick to your budget as much as possible, but remember that it's okay to occasionally splurge or adjust your budget if necessary. The key is to maintain discipline and consistency in managing your finances over the long term.