How To Do A Budget: A Guide
Did you know a budget is simply a plan for how you spend and save your money? Whether you’re dealing with surprise costs or just trying to build better saving habits, having a clear budget can make a real difference.
In this guide, we’ll show you how to create a budget that can work for your life, help to avoid common pitfalls, and keep your finances on track. You’ll also find practical budgeting tips on how to budget and save, stay on top of your spending, and use budget categories that match your lifestyle. Whatever your money goals are, Credit24 is here to help you feel more in control.
Why you need a budget
A personal budget isn’t about cutting back - it’s about having a plan. When you know how much is coming in and where it’s going, you can make clearer decisions and feel more confident about your finances. It gives you the flexibility to focus on what matters and avoid unnecessary stress.
Budget planning doesn’t have to be complex. It just needs to give you a clear picture and help you stay on track. With plenty of budgeting methods available, it’s worth finding one that works for how you live and spend.
A monthly budget can help you:
Understand where your money go
Build your savings with less effort
Make informed decisions about spending
Prepare for unexpected costs
How to do a budget in 6 steps
These six steps break it down into a simple, manageable system that you can actually stick to.
1. Calculate your income
The first step in how to budget money for beginners is figuring out how much you earn each month. That means more than just your wage. Include side gigs, government payments, support from family, and investment income. If your income varies, average it out over a few months to stay realistic. This figure will be the foundation of your monthly budget.
2. Track your expenses
The first step in how to budget money for beginners is figuring out how much you earn each month. That means more than just your wage. Include side gigs, government payments, support from family, and investment income. If your income varies, average it out over a few months to stay realistic. This figure will be the foundation of your monthly budget.
3. Choose your budgeting method
There are many ways to approach how to budget. You could try the 50/30/20 rule (needs, wants, savings), zero-based budgeting, or the envelope system. Another effective method is bucketing. That means splitting income into separate accounts for bills, spending and savings. The right choice depends on your habits and how hands-on you want to be. The goal is simply to find what helps you stick to a budget.
4. Set up your budget categories
Budget categories are how you organise your spending. They give your budget structure and make it easier to see where your money’s going. A good set of categories helps you plan better and stick to your goals.
Here's a breakdown of the main ones to include:
- Housing – Rent or mortgage payments, rates, insurance, and maintenance.
- Transportation – Fuel, public transport, car payments, rego, insurance, and repairs.
- Food and groceries – Supermarket shops, takeaway, and dining out.
- Utilities – Electricity, gas, internet, water, and mobile phone bills.
- Healthcare – Private health insurance, out-of-pocket costs, medication, dental.
- Debt payments – Money you owe to banks, credit cards, buy-now-pay-later, or even personal loans from friends.
- Savings – Money set aside for goals, emergencies, or future plans.
- Entertainment – Streaming subscriptions, outings, hobbies, events.
- Personal care – Haircuts, toiletries, gym memberships, clothing.
- Miscellaneous – Anything else that doesn’t fit above, like gifts, pet costs or one-off purchases.
5. Set realistic goals
When figuring out how to make a budget, goals give your plan direction. Think short-term (emergency savings, debt repayments) and long-term (buying a car, travelling, owning a home). Whether you’re budgeting on a low income or managing a higher one, tailor your goals to what you can afford and build gradually. This keeps your budget achievable and motivating
6. Monitor and adjust
Knowing how to create a budget is just the beginning. You also need to check in with it regularly. Set a weekly review to track spending and a monthly one to make adjustments. If something unexpected pops up, tweak your plan. Budgeting tips include using apps to monitor cash flow and alerts to keep you on track. Staying flexible is essential in learning how to stick to a budget.
How to stick to your budget
Even a strong plan mayfail if it’s too fixed . These budgeting tips can help:
- Set pre-authorised payments for your bills and savings so you don’t forget or get tempted.
- Use separate accounts for different budget categories.
- Review spending weekly to stay on track.
- Set reminders and share goals with a friend to stay accountable.
- Plan for unexpected . Leave a small buffer for life’s curveballs.
How to budget on a low income
Learning how to budget on a low income takes more focus, but it’s definitely possible with a bit of planning. When money’s tight, every dollar needs to do a job.
Here’s how to make the most of what you have:
Prioritise key expenses
Start with the essentials: housing, food, health, and transport. These are non-negotiables, and covering these first gives you peace of mind and a solid foundation. Try listing them out by due date or importance to make sure nothing slips through the cracks.
Cut back on non-essentials
Subscriptions, takeaway meals, or spontaneous purchases can eat into your budget fast. That doesn’t mean cutting out everything fun, but small changes, like cooking more at home or pausing unused subscriptions, can free up more money for what really matters.
Find ways to boost your income
Even an extra $50 a week can make a difference. This might mean a weekend side hustle, selling things you don’t use, or picking up casual hours if possible. It’s not always easy, but even short-term boosts can help build momentum.
Use government support and community services
Don’t overlook what’s already out there. From rent assistance to utility vouchers or no-interest loans, there are programs that can lighten the load. Local charities and community centres often offer food, clothing, or bill relief especially if you’re going through a tough patch.
Be realistic with your planning
If you can only save $5 a week right now, that’s still a win. Small habits build over time. Keep your system simple, review it regularly, and adjust when life changes.
Common budgeting mistakes to avoid
If you’re just starting learning how to budget, avoid these common traps:
- Overestimating income—only count what’s consistent.
- Skipping irregular expenses—set aside a little each month.
- Not building an emergency fund—even $500 can help.
- Ignoring small purchases—they add up fast.
- Being too strict—allow room for fun or you might blow it all.
How to create a budget: Tools and resources
To make budgeting easier, use tools designed to help:
Budgeting apps:Such as Lunch Money or Quicken help track spending.
Bank tools: Most banks offer budgeting insights in their apps.
Government tools: Check out calculators and guides from Moneysmart.
Counselling services: Free support from the National Debt Helpline and others.
How to do a budget: FAQs
How to budget for beginners?
Start by writing down all your income and expenses. Use simple budget categories and pick a budgeting method that suits you. Open separate accounts for bills, savings and spending. Review weekly and adjust monthly.
How often should I review my budget?
At a minimum, every 3 months. Ideally, do a quick weekly check and a full monthly review. As soon as you face major life change, review again.
What percentage should I save?
Aim for 20% if possible. If that’s too much, start with 10%. It’s about consistency. Putting money aside regularly is key to budgeting success.
How much emergency fund do I need?
Start with $1,000 if that’s all you can manage. Over time, aim for 3 to 6 months of living expenses. It’s a buffer against the unexpected.
Should I use cash or digital tracking?
Both cash and digital tracking have their strengths - it depends on what helps you stay in control.
Digital tools make it easier to automate things like bill payments and savings.
Cash-based budgeting works well if you find digital spending a bit too easy.
What if I go over budget?
It happens - and it’s not the end of the world. Going over budget doesn’t mean you’ve failed. What matters most is what you do next.
Start by figuring out what went wrong. Once you know why, adjust your budget categories to better reflect your real spending habits. This makes your plan more accurate going forward. Don’t punish yourself or try to cut back so hard that it’s impossible to stick with. Just aim to get back on track - realistically and as soon as you can. That might take a few days, or it might take a couple of months if you’ve gone over by a lot. The key is to keep moving in the right direction.
Need a personal loan? Meet Credit24
If you’re trying to manage your budget or cover an unexpected cost, a personal loan from Credit24 may be an option. Whether it’s a medical bill, car repair, or just something you didn’t see coming, we can help with fast, flexible support. Our loans come with clear, fixed repayment terms and no hidden fees, so you know exactly where you stand. The application is fully online and only takes a few minutes. With flexible loan amounts and transparent costs, Credit24 gives you more control when life throws you off track.
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