As you plan out your goals and finances for the New Year, it’s a good idea to reevaluate your budget and start developing a new one that will guide you through 2024. If you found you had some trouble creating a budget last year, don’t worry, we’re here to help. Before you go searching for a budgeting template, here are a few factors you may like to consider including in your budget this year.
Record your income
To be as accurate as possible with creating your budget, one of the major elements to consider including is your income1. Keep in mind, as everyone is different, some may have multiple forms of income while others may have just one. What types of income should you be including when setting your budget? This could be the regular income you receive from your job or jobs (if you have multiple), rental income if you have an investment property, or government benefits and pensions1. When recording your income, make sure you also note where it’s coming from (e.g. work, investment property, etc.) and how frequently you receive each type of income1.
Record your expenses
Another major element of your budget is your expenses, so it’s very important you account for all of your regular and incidental expenses. This can include fixed expenses, such as rent, utilities bills, insurance bills, household expenses (such as groceries), regular medical expenses, transportation costs (such as fuel), and family costs (such as school or child care fees)1. It’s also a good idea to consider accounting for unexpected expenses (such as car repairs) in your budget so that if these do arise, you can be assured you have some funds set aside1. Make sure you’re as accurate as possible when recording your expenses – note down the type of expense, the approximate cost, and the frequency at which it occurs1.
Set savings goals
If you’ve decided to set yourself a range of savings goals this year, it’s worth catering for these goals in your budget so you’re continuously working towards achieving those goals1. For example, if your goal is to save $100 each month for the year, make sure there is a section in your budget that accounts for this $100 being set aside each month1. You may choose to have a separate section of your budget dedicated to your savings goals or you may like to incorporate this into your expenses section. Whatever works best for you, make sure you don’t forget to add it in!
Start an emergency fund
In order to truly ensure you’re prepared for any unexpected expenses that may arise, it’s a good idea to consider setting up an emergency fund. Essentially, an emergency fund is your “rainy day” money that you can access in the event an unexpected expense occurs – think, your car breaking down or your pet needing major surgery2. While having an emergency fund keeps you from dipping into your savings, it’s also something you need to actively be building up to reap the most benefits2. That means you need to ensure you account for your emergency fund when creating your budget. Once you’ve decided on a set amount of money to contribute to your emergency fund, add this into your budget2. As with your savings goals, you may like to treat this as a separate section of your budget or as a subsection of your expenses.
Budget for your debts
Another expense you may like to include as a separate section of your budget is your debts. These are generally fixed expenses you pay down regularly, but, you may also have goals tied to paying down your debts2. You likely would have already accounted for your minimum debt repayments while setting up your budget though it’s also worth noting in your budget whether you plan to make any extra repayments towards your debts2. This ensures you aren’t leaving yourself short and can still achieve these goals2.
Set a frequency for your budget
Now that we’ve highlighted the different factors you may like to include in your budget, it’s important to ensure you carefully decide how frequently you will update your budget. Generally, budgets are set on a weekly, fortnightly or monthly basis depending on a person’s circumstances3. Perhaps you may like to align your budget to your income payments or to regular expenses you pay for3. Whatever frequency you choose, it’s important to ensure it’s catered to your personal situation and that it will keep you on track to achieve your goals3.
Monitor your budget
Once your budget is all set up, don’t forget to set yourself some reminders to check in on your budget3. For example, if you have a monthly budget, you may like to conduct a check in each fortnight. Doing so keeps you on track and accountable of sticking to your budget so it doesn’t fall off your radar3. You may also like to set some time aside to regularly reevaluate your budget (such as on a quarterly basis) and whether there is anything you need to change.
If you need some help planning out your budget, Queensland Country Bank has a range of budgeting tools available.
General Advice Warning: This information is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider the appropriateness of the information provided. In particular, you should seek independent financial advice.
Sources
1MoneySmart, 2023, How to do a budget, https://moneysmart.gov.au/budgeting/how-to-do-a-budget
2MyBudget, 2023, How do you plan financially for the new year?, https://www.mybudget.com.au/blog/money-management/plan-financially-new-year/
3Katia Iervasi, 2022, Budgeting 101: How to budget money, NerdWallet, https://www.nerdwallet.com/au/personal-finance/how-to-budget