It can be easy to underestimate how much you spend on a day-to-day basis. But in order to create a realistic budget, it’s important to find out how much you’re spending, and on what.
Firstly, take a good hard look at your bank statements. Go back over the past two or three months and make a note of everything you’ve paid for.
Remember there are some hefty costs that only come up every year, or less, like car insurance and registration.
It’s helpful if you group things into categories. Let’s start with the basics: food, clothing, housing, transport, communication and insurance.
The biggest expense you’ll face is probably your rent or mortgage. If you own your own place, you’ll also be hit up for home maintenance (repairs), home and contents insurance, rates, and utilities (e.g. gas, electricity, water).
If you’re currently renting or considering renting, check out our Renting vs. Buying calculator. This calculator shows you what size home loan repayments you may be able to service based on your current rental payments.
Food and drink
This includes your groceries, but also your takeaway lunches and evening feasts out. Don’t forget those coffees and other incidental snacks – it all adds up.
You might want to divide this category into your work clothes and your fun clothes to sort out what’s necessary and what’s not. If shoes are your thing, you’ll need to account for these too.
The costs of running a car can easily add up. Fuel’s just the start—there’s parking, repairs, preventative maintenance and insurance.
A really robust budget also factors in things like replacing your car at some point.
Public transport’s often cheaper, and this also has to be factored in.
Consider the bills for your mobile, internet and (if you still have one) landline charges.
If you have any sort of insurance – health, life, car, travel, home or perhaps income – you’ll be paying premiums. They may be yearly or monthly, but make sure they’re factored into your final budget.
Health and wellbeing
Although these costs might be occasional, your budget should take into account things like medical costs such as going to the doctor or dentist or optometrist.
In this section you can also include lifestyle costs like gym membership and sports club fees.
Life and leisure
Think about all those incidental costs that pop up over the year: magazine and TV streaming subscriptions, weekends away, movies, Christmas and birthday gifts.
Every now and then, you’ll unfortunately have to replace items like the fridge, washing machine, TV, or lounge suite.
Replacing these can make a significant dent in your savings if you don’t have a plan in place to prepare for them ahead of time.
These include personal loans, credit cards, store cards and other loans, and the interest that comes with them.
This is where you’ll budget for everything else that doesn’t fit within the categories you’ve laid out. These might include pet costs, uni or office fees, childcare, and beauty costs.
Our budget planner will do a lot of the sums for you—and average out those tricky occasional costs to a weekly number.
The government’s MoneySmart website also has a comprehensive section on budgeting that’s worth a look.