If you’re more like, “Budget? What budget?”, then we need to talk…

Whether you’re shopping for birthday gifts, Christmas presents, your weekly grocery shopping, a new outfit or a house, you need to have a framework to work within.

The bigger the price tag, the more important it is to stay within that budget.

It’s also really important to stick to your budget if you’re saving to buy a home.

Now, don’t get put off by the word “budget”. It doesn’t have to be super restrictive and deny you all the good things in life. Those kind of budgets just don’t work and usually end with a massive blow out at the end.

You can call your weekly or monthly budget your spending plan – because that’s exactly what it is. It’s a breakdown of what you’re going to be spending your money on. And it’s a really good tool to use when you’re saving – or planning on getting a loan in the near future.

To create a spending plan, take a look at your spending pattern for the past three months, or start tracking your spending today and take a look at it in a month. Create some categories like food, entertainment, health, clothes, bills, rent, “play money”*, savings etc and identify how much you’re spending in each category. See if there’s anywhere you can make some adjustments so you can filter more money into your savings. Then stick to that spending plan for a month, make some adjustments if needed, then stick to it for 3 months.

The best part about having a spending plan is that it makes you more aware of what you’re spending. It’s moving you from mindless spending to mindful spending – and that’s always a good thing.

When we’re talking about a budget for buying something – whether it’s a house or an outfit, start with doing some research. Find out what you can expect to pay and if there are any ways you can make some savings.

With a house, you might save a considerable amount of money by just moving your search one suburb out from your ideal location. Or you may be able to get an extra bedroom in that next suburb. Compare recent sales so that you have a good idea of what the market is doing and so that you can base your negotiation on something concrete rather than a number pulled from thin air.

My advice: make budgets your friends. They can be very helpful when you make them work for you.


* It’s always good to have “play money” – a certain allocation each month to spend on whatever you want without justification. If you don’t spend it one month, save it for the next month. It’s a great way to feel like we have a little flexibility in the spending plan and that we’re not denying ourselves too much.