How to budget

You wouldn’t travel to a new destination without a map, so why would you try to navigate your finances without a budget?

What is a budget?

A budget is an essential tool for money management. It lists the money you plan to have coming in (income) and the money you plan to have going out (expenses) of your bank accounts. Think of it as a map for your personal financial situation.

Why do I need a budget?

When you track what money actually comes in and out of your bank accounts against your budget it helps give you insights to understand how you use money, enabling you to better prioritise your expenses between essential and discretionary spending, and manage your spending.

A budget can be helpful to anyone who has money coming in and going out (and that’s just about all of us).

How to create a budget in 4 easy steps

Step 1: Calculate your income

Income can come from many sources, such as your pay, any government assistance you might receive, interest on savings and earnings from any investments, such as rent from an investment property, or dividends from shares.

All the money you have coming in needs to be included to get an accurate financial picture.

Step 2: Work out your expenses

Review your bank and credit card statements, bills and receipts to work out what you’re spending money on and how much you’re spending.

Your expenses will include things such as:

  • your mortgage (home loan) or rent
  • food
  • utilities such as gas, electricity, internet, mobile phone and water
  • transport costs like public transport, petrol and tolls
  • medical expenses, such as health insurance or regular medications
  • school fees and costs
  • pay TV subscriptions
  • gym memberships
  • entertainment

Don’t forget to include expenses you may pay for on a quarterly or annual basis, such as home or car insurance, car registration and servicing, and property rates.

Keeping track of what’s going into and out of your accounts can be tedious and time consuming, especially if you have multiple accounts across multiple financial institutions.

The AMP money manager tool allows our customers to gather data from over 200 different financial providers to our secure online site. What’s more, it also automatically categorises your transactions, making tracking your incomings and outgoings easy. Simply log into My AMP, select the 'Manage non-AMP accounts' tab and then add your account login credentials from other financial institutions.

Step 3: Set up your budget

A budgeting tool, such as our budget planner calculator, can help you build a budget and get a better understanding of your finances. By adding your income and expenses, and how frequently you earn or incur them, you can create a view of your total weekly, fortnightly, monthly and annual income and expenses.

If you’re an AMP customer, you can also use our money manager tool to automatically create a personalised budget based on your transaction history. If you’re not an AMP customer, you can see how money manager works after using the goal explorer tool.

Step 4: Review your budget regularly

Once your budget is set up, it’s important to monitor it. If you’re using money manager, you can use it to generate reports and view graphs of your income, spending and cash flow.

It’s also a good idea to review your budget regularly, to ensure that it’s still accurate and up-to-date.

Any change in circumstances, which leads to a change in your income, expenses, debts or financial goals, might signal a need to update your budget, such as:

  • if you get a new job or promotion
  • you’re made redundant
  • you get married or divorced
  • you buy a house
  • you have a baby

How to use your budget

  • Identify whether you have any money left over to save towards your goals, or whether you’re spending more than you earn and need to find areas to cut back on.
  • Save for upcoming and annual bills by putting a set amount aside into a dedicated savings account on a regular basis. The AMP Bett3r account, a smart bank account which features three linked accounts (Pay, Save and Spend), can make saving for both bills and your goals easy.
  • Before you go to the shops, check your budget to see how much you can spend, and stick to it.

Budgeting tools

For help with budgeting, check out our:

And, finally, for more help with managing your money, or complex cashflow strategies, speak to your financial adviser. If you don’t have a financial adviser, find an adviser online or call us on 131 267.

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Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information is general in nature hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.

Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

AMP Bett3r Account is issued by AMP Bank Limited ABN 15 081 596 009, AFSL and Australian credit licence 234517.