Why your budget shouldn't feel like a punishment

RACQ Bank's Eszter Cathcart explains why a budget should be an essential part of your life.

Does the thought of creating a budget make you feel fear, shame or disappointment? If you said yes, you’re not alone. 

Many Australians fear they won’t be able to stick to a budget, shame they didn’t start earlier, or disappointment they couldn’t make the last budget a success. 

How do I work through fear to make a successful budget?

Start by thinking of yourself as the CEO of your household. The CEO makes tough decisions for the benefit of long-term success. With this attitude, you can make mistakes, make corrections and keep moving towards the goals you want to achieve.  

Where do I start?

Find what makes your money matter to you

Take some time to consider why you’re putting a budget together in the first place. 

Do you want to save, create wealth or is it just because your family says you should have one? 

Without understanding why you’re going to the effort of putting together a budget, it’s going to be very difficult to commit to making a change. 

Understand your cashflow

Find out what money is coming in and going out and divide your expenses into appropriate categories. 

Once you know how much you’re spending on food, bills and luxury items, you’ll be able to identify where you can make reasonable changes.

Make it work for you 

Whether it’s an app, paper and pen, or an excel spreadsheet, there’s plenty of different ways you can build your budget. 

The most important thing is to find the format that works for you. 

You need to own the actions of creating this step so that you feel ownership and a sense of success over it. 


Review your spending

Now you know where you’re spending your money, investigate how you can reduce your big bills (e.g. electricity, gas, water, phone plans). This could mean calling your supplier to see if they can offer a better deal or changing your habits to reduce your usage. 

Once you have your big bills under control, look at how much you spend on ‘non-critical’ items. Are you shouting drinks for your friends that are never returned or spending money that doesn’t need to be spent? Do you really need to subscribe to every streaming service or are there better programs on free-to-air TV?

Commit to small changes

If you’ve never followed a budget and suddenly you start cutting out all the things you love it will feel like you’re punishing yourself and you’ll quickly fall of the bandwagon. Start out with things you won’t miss, like reducing your larger bills by shopping around. Then move onto the harder items like cutting down on your takeaway or shopping. 

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.