Start the new year on the right track and plan your finances

With less than 1 month until the start of a fresh new year (where has this year gone!!), we’ve been working on some hot tips to help you budget for 2021. We know that many things are out of our control (hey, this year was a great example of this!!), but one thing we can control, or at least plan for, are our finances.

Whether you’re an individual or a business owner (or both), these tips will help you start to build a budget for 2021.


Going forward starts with looking back

When budgeting for the year ahead, it’s important to reflect on the year that’s been and know where you’re currently at. Reflection allows you to see where you’ve gone wrong and what aspects of your budget needs improving. It also provides the opportunity to see where you’ve gone right with your budgeting, so you can make sure you do the same next year.


Tips to make a budget

Don’t worry about going and spending money on buying fancy tools or software to create a budget – grab a pen and paper or an excel spreadsheet.

  • Keep it simple – make sure you and other members of your family can understand the budget. If you or others don’t understand it, it makes it difficult to stick to.
  • Communicate your budget with your family – make sure everyone in your family who has access to your finances is aware of the budget you’ve put together and why. If you’re all on the same page and have a similar end point in mind, you’ll have more success as keeping to your budget.
  • Make sure you can refer back to your budget regularly – whether it’s weekly, fortnightly or monthly, you need to be able to refer back to your budget on a regular basis. Look at how your expenditure is tracking against your budget. If there are some obvious issues, make sure you communicate these with your family or colleagues, so everyone continues to be kept up to date on changes.


Setting your financial goals

The key in setting your financial goals is to make them realistic and manageable. If your goal is to pay off a specific debt or loan, work out how much you need to pay each week or fortnight and work this into your budget. Make sure you can realistically afford to make these repayments, or look at other areas of your budget you could adjust to make this goal more manageable.


Tracking income and expenditure

The first step in making your budget is to track your income – this includes any benefits you might be receiving, but don’t include any bonuses you think you might receive at work.

Expenditure is all of your outgoings; rent, bills, food, vehicle costs, child care or school fees, and credit card and loan repayments.

Make sure you also account for those smaller forgotten items (eg. bday presents for a child’s party, emergency health issues, pet bills, etc) – eventhough they might be small, they can still all add up. You could also add a line item in your budget for ‘Miscellaneous’ – it’s up to you what figure you place against this line item, but the key is to make sure you include it.

Once you’ve recorded these figures, make sure your income is greater than your expenditure.


Make sure you’re also saving money

There’s no point putting together a budget, if you haven’t also included amounts for savings. Everyone can save, no matter what your income or expenditure is. Also consider if your savings are for a specific item (a new car, a holiday, a new home), or simply to build up your emergency savings fund.


Setting up the right structure for budget success

One of the things that can quickly derail your budget is being able to see a large lump sum of money in your bank, and think this is money available to you to spend, spend, spend. Instead split up your funds by setting up different bank accounts for different goals or uses. Set up automatic transfers that co-incide with your pay check so your funds are transferred automatically into their relevant accounts. You might also calculate the monthly funds required to pay all of your necessary bills, and set up an account for ‘bills and direct debits’, so that bills are always paid on time and you can rest assured you have the right funds available.