Becoming financially secure is not a matter of earning more money but using the money you earn in a better way.

he only way to make the best use of your income is to draw up a money plan. Yes – a budget.

How to do a budget

It’s not complicated – anybody can do it and it takes about an hour to set up.

Find a sheet of paper, or open an Excel spreadsheet, and write down your fixed outgoings such as house repayments, loan payments, school fees, rates, car registration, fuel costs, insurance and so on.

Remember to put something in there for regular savings too.

We all have this unique ability to pay our commitments and spend what’s left over, so make sure saving is a major commitment, just like paying the rent or loan repayments.

Add up the figures and then divide the total by the number of times you get paid.

If it’s fortnightly that will be 26, if it’s weekly, 52.

Let’s suppose it comes to $52,000 a year and you are paid fortnightly.

One 26th of $26,000 is $2000. That is the amount you will need to set aside from each pay to cover the items listed.

Deposit that $2000 into a separate bank account and use it for the sole purpose of paying the expenses you listed when you arrived at the original total.

Provided you don’t fall into the temptation of dipping into the account for other purposes, you will now have all your fixed costs and your regular savings under control.

Next, estimate how much you spend a year on predictable expenses such as power, phone, gifts, clothing and hairdressing.

Divide these by the number of pay days and put the appropriate sum into a separate account as well.

Then figure out what you spend over Christmas and start making regular deposits into a Christmas account.

While you’re at it, start a holiday account too. And make sure you use fee-free accounts – there are plenty to choose from these days.

Look what you have achieved.

You have now provided for all your regular expenses, as well as Christmas and holidays, and never again will you have to worry about paying those bills.

In fact, you will look forward to the bills coming because you will have the money in the bank to pay for them.

If you now pay cash for all other consumer spending, you will be on the right track even though you may have to eat frugally for a few days if you get an unexpected costly emergency.

In any event, you will certainly be ahead of most of the rest of the population – you will be living within your means and in control of your finances.

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.