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Budget Planning

Budget planning made easy

Budget planning may not hold the same appeal, as say, party planning, but it will ensure you’re on the right step when it comes to your money.

“The first thing I recommend you do is to put in place a strict cash flow management routine for your personal life,” says Peter Switzer, money guru and founder of Switzer Financial Planning.

“This is my fancy way of saying ‘do a budget’.”


Starting line

It’s said if you fail to plan and you plan to fail and it’s never been truer than when it comes to budgeting. Ignorance is certainly not bliss – and you won’t know what you’ve got til it’s gone.

If you’re not sure where to start, there are plenty of personal budget calculators available online. Here, you can enter your income and expenses to find out if you’re saving (or blowing!) your budget.

But it’s not all penny-pinching doom and gloom. The Australian Securities and Investment Commission (ASIC)’s consumer website – FIDO – says a budget is the best tool for finding extra money.

Their free budget budget planner sorts your income and expenses, and calculates your weekly, fortnightly or monthly surplus or deficit.

“I know this is boring, but in my experience, cash flow and the management of cash flow is one of the foundation blocks you need to lay down when constructing your financial wealth,” says Switzer.

Something’s got to give

If your expenses are larger than your income, then something’s got to give.

“The real trick with budgeting is to use the information to reduce your expenses and stop yourself from wasting your hard earned money,” says Switzer.

If money management is not your strong point, don’t worry. If planned correctly, your budget should help you save and spend.

“Don’t cut out all the wants, because if your budget’s too tight, it’s not going to work” says FIDO.

Tips and traps

Here are some simple steps to stay one step ahead when it comes to budget planning:

  • Print your budget and put it somewhere you can see it often.
  • Not all expenses were created equal. For instance, your rent (or mortgage repayments), transport and food costs should be prioritised over, say, the new season’s pantsuit.
  • If you know you have a weakness for credit cards, cut yours up or leave it at home. Either way, make paying these off a priority.
  • Set goals – this might be to save for something special or simply to reduce your debts. Want a tip to stay focused? Keep a picture of that special something near your budget. This will help you keep the faith.
  • Instant gratification means you need to take into account interest on your purchases. Keep a close eye on the interest rates, terms and conditions on your credit cards.
  • Regularly revise your budget – as things change, so too should your budget. It’s a good idea to set a regular review period – say, every three months. There is no time like the present – happy budget planning!
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