Debt strategies – Set and Maintain a Budget

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A key to building wealth is saving. Setting a budget is about finding a balance between income and expenses and deciding what’s important so you have money left over to save.


  • Setting a budget can help improve your cashflow and increase your savings capacity.
  • Taking charge of your money can help you feel more secure and in control.
  • A budget allows you to plan ahead to help meet your goals.

How it works

The best way to start taking control of your finances is to do a budget (or expenditure plan). A budget is simply a tool to help you identify your income and expenses. It shows if you are spending more or less than you can afford, and it can help you determine your capacity to save for future goals.

There are two sides to a budget – income and expenses. When putting your budget together, you should try to identify all regular payments over a full year.

  • Income payments include salary, pension income, dividends, distributions, rental income and interest. You can use the after-tax amount of income or you can include an allowance for tax in your expenses.
  • Expense payments include mortgage repayments, rent, bills, car costs, public transport costs and general living expenses.

To help identify your income and expenses, it can be useful to look through your pay slips, bank and credit card statements, bills, receipts and even your shopping dockets. Use your best guess if there’s anything you can’t find or if amounts vary across the year. Your budget will probably need to be adjusted over time until all income and expenses are captured.

Budget results

Once your budget is complete, you can identify your disposable income. Your disposable income is the total of your income less the total of your expenses.

  • If your disposable income is negative, it means you are spending more than you earn. You should review the expenses side of your budget to see if there is anything you can cut back on or cut out altogether. Talk to your financial planner about strategies to help reduce your expenses.
  • If your disposable income is positive, it means you have capacity to save. You could consider setting up a regular savings plan with your surplus income to increase savings for your future goals.

Even if you have surplus income it might be worth looking for further savings. The budget gives you an opportunity to look through your expenses and identify which items you need for basic living and which are extras that you could cut back on to increase savings. It is important that you don’t cut out all of your extras because a budget that’s too rigid won’t work.

For your budget to be effective, it should be used in conjunction with a regular savings plan. The savings plan should direct your disposable income into a savings account as soon it comes in and before it is spent.

Ongoing budget review

Your budget should be reviewed on a regular basis (this might be every 6 to 12 months) to ensure it continues to reflect your current income and expenses. It should also be reviewed if there are significant changes to your income or expenses, such as changing jobs, or buying a new house or car. Regular reviews will help your budget stay on track and help you achieve your savings goals.


  • Starting a budget for the first time can be difficult but it does get easier as you along. Once your budget is set up, ongoing updates are much easier.
  • ASIC have an online budget planner that you can use located at

Your Westlawn Financial Adviser can help you to set and maintain a budget. Contact us today:

General Advice Disclaimer

All of the material published on this website is for information purposes only and does not constitute advice. This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a Financial Adviser, whether the information is appropriate in light of your particular needs and circumstances.

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