Creating a budget
Just the word "budget" makes some people nervous.  It's really not complicated: it means that you record all your income and all your expenses.  The trick is to make sure that you record everything.

 

To most people, income means a pay-cheque. But you may get money from other sources, such as working for families, family tax credits, child support or interest earned on a savings or investment account.  Income doesn't have to come in to your household regularly. A tax refund, for instance, is part of your income.  If you sell things on Trademe, it is part of your income. When you calculate your income, be sure to include all the sources of money that come into your home.  

Most expenses are obvious: you tend to notice whenever you open your wallet, swipe your Eftpos or credit card, write a cheque, or log on to internet banking, for example. Some "hidden" expenses that may not be so obvious are:


  • Council Tax and District Tax
  • Automatic debits from your bank account
  • Bank fees that are taken directly from your account
  • Credit card interest payments
  • Small change expenses, such as vending machines, fast food, and parking meters
  • Taxes on interest
  • Donations

At the end of each month, add up your expenses and compare them with your income. This is a great recommended way to start your budget and will tell you how much surplus you have every month. As you get going, you will want to start keeping a closer eye on your expenditure. To do this it is recommended to group both your income and expenses into categories, such as "Accommodation," "Transportation," "Grocery," or "Entertainment" to help them see patterns and trends.   

 

Did you know: The three largest components of total household expenditure in the UK in 2007 were Transportation (14 Percent), Recreation (12 percent) and Non mortgage related Accommodation, fuel & power (11 percent). How much are you spending?

 


Next, see Balancing a Budget for help figuring out your next step. 

 

 
TIP:

Set up a budget in less than 2 minutes With Who Stole My Money.

Simply download your transactions from your online banking and upload them into the system. 

All your income and expenses will be recorded for you. In less than 2 minutes you can have a budget going even if you have never done budgeting before.

Furthermore the system will help automatically group some of the more common spending into categories for you so you can get started down the path of seeing patterns and trends.