Already a subscriber?About a year ago, school teacher Brendan Deith noticed there was a hole in his budget. The 40-year-old Melburnian had done $400,000 worth of renovations to the house he shares with his wife Beck and two daughters in 2021, and slowly but surely risingHis concern was that with further rate rises the family’s $700 a month surplus would degenerate into situation where they were $1500 in the red. “We knew we had to come up with a plan,” Deith says.
The key to good budgeting is understanding your spending habits and being able to shift them accordingly, says Ben Kingsley, the founder of budgeting app Moorr and mortgage broker Empower Wealth. “You want to establish some sort of rule because if you don’t have that, you’ll be all over the place,” he says.
These days most people will generally use digital buckets as opposed to physical envelopes and cash. You can choose your own buckets or envelopes, but some common categories are savings, groceries, clothing, debt and entertainment.This method will help if you’re a spontaneous spender, but you’d like a nice mix of structure and freedom in how you choose to allocate your fun money on a month-to-month basis. This is a less intense version of the zero-based budget.
Wants are things like travel, clothing and dining out that aren’t essentials. The culture category is designed cultivate the idea that some spending on experiences, rather than physical goods, can contribute to quality of life, wellbeing and learning. And critically, having “unexpected” as a category means you are more likely to pick up on the number of expenses that crop up out of the blue, and can help train your budget to accommodate them.
Steinhauser says this is a good strategy if you suspect you’ve got too many direct debits and subscriptions. “Often there are things on your credit card and spending you don’t remember – you might remember you signed up to Netflix, but you might have forgotten you signed up to Amazon and Audible,” he says.