How to Create a Budget You Can Actually Stick To: A guide

In a world of rising costs and financial pressures, creating a budget that you can realistically stick to is essential for achieving financial stability and living the life you want. In Australia, where the cost of living can vary significantly between urban and rural areas, budgeting might feel like a daunting task. However, with the right mindset and a few practical tips, it’s possible to create a budget that helps you save money, take advantage of online deals, and embrace frugal living without feeling deprived. Let’s walk through a step-by-step guide tailored to the Australian lifestyle that will help you build a budget you can actually stick to.

Why Budgeting Matters

Budgeting is more than just tracking your income and expenses—it’s about controlling your finances, rather than letting them control you. In Australia, whether you live in bustling Sydney, laid-back Melbourne, or a quieter town, a solid budget ensures you’re prepared for unexpected costs, allows you to save money for the future, and enables you to enjoy life without worrying about overspending.

Step 1: Determine Your Income

The first step in creating any budget is to understand how much money you have coming in. This includes your salary, any side income, government benefits, or investments. In Australia, many people receive their wages weekly or fortnightly, so it’s important to consider how often you get paid and structure your budget accordingly. If you have variable income—perhaps from a freelance job or casual work—be conservative in estimating your earnings. Using a lower estimate will give you more room for flexibility and reduce the risk of overspending.

Step 2: Track Your Expenses

You can’t build a solid budget without knowing where your money goes. Start by tracking your expenses for at least a month. This means writing down everything from major bills like rent or mortgage payments to daily coffee runs and impulse purchases. Many Australians find themselves overspending on everyday conveniences, from takeaway meals to online shopping sprees.

It’s helpful to categorise your spending into essentials and non-essentials:

Essentials: Rent, groceries, utility bills, transport costs, and any debt repayments.
Non-essentials: Eating out, entertainment, subscriptions, clothing, and hobbies.

Once you’ve tracked your expenses, you’ll have a clear picture of your spending habits. You may notice that some areas, like dining out or impulse shopping, are taking up a larger chunk of your income than you realised. This awareness is the first step toward making meaningful changes.

Step 3: Set Financial Goals

Setting clear, realistic goals is the backbone of any successful budget. Your goals should be both short-term and long-term. For instance:

Short-term goals could be saving $500 for an emergency fund or reducing your credit card debt.
Long-term goals might include saving for a house deposit, building up your superannuation, or planning for a big trip around Australia.

Setting goals gives you something to work towards and helps you prioritise your spending. When you’re tempted by an online sale or spontaneous purchase, it’s easier to resist if you remember that your goal is to save money for a larger purpose. Keep your goals visible—write them down, create a vision board, or set reminders on your phone.

Step 4: Create a Budget Plan

Once you have a clear understanding of your income, expenses, and financial goals, it’s time to create a budget plan. One of the most popular methods is the 50/30/20 rule, which suggests:

50% of your income goes to needs (rent, groceries, utilities),
30% goes to wants (dining out, entertainment, hobbies),
20% goes to savings and debt repayment.

This method works well in Australia, where the cost of living can be high but still allows for some flexibility. If you find that your "wants" category is consuming more than 30% of your income, you may need to adjust your spending in that area. This doesn’t mean cutting out all the fun—it just means being more mindful.

Step 5: Take Advantage of Online Deals

Living in the digital age has its perks—Australians have access to a wealth of online deals and discounts that can help you save money. Whether it’s comparing utility providers on comparison websites, using coupon codes when shopping online, or taking advantage of cashback offers, the internet is full of opportunities to stretch your dollars further.

Frugal living isn’t about denying yourself the things you enjoy—it’s about finding smarter, more cost-effective ways to get them. For example, many online retailers in Australia offer special discounts for new customers, free shipping, or loyalty programs. Before making any purchase, it’s always worth checking if there’s a discount code available. Websites like RetailMeNot or Honey can help you track down these deals.

Additionally, using apps like ShopBack or Cashrewards allows you to earn cashback on purchases from major retailers. It may only be a small percentage, but over time it adds up, and it’s essentially free money back in your pocket.

Step 6: Embrace Frugal Living

Frugal living in Australia doesn’t mean going without—it’s about making smarter choices. Here are a few tips to adopt a more frugal lifestyle:

DIY Meals: Australia’s café culture is wonderful, but those $20 brunches can add up. Consider making your own versions at home for a fraction of the cost.
Public Transport: If you live in a major city like Melbourne or Sydney, public transport is often cheaper than driving or ridesharing services. Consider walking or cycling where possible to save even more.
Free Activities: Australia is blessed with beautiful natural landscapes, from stunning beaches to national parks. Take advantage of free activities like hiking, beach days, or exploring your local area.
Buy Second-Hand: Embrace op shops (thrift stores) or online marketplaces like Gumtree and Facebook Marketplace for great deals on second-hand goods. You can often find high-quality items for a fraction of the price.

Frugal living doesn’t have to feel restrictive. It’s about being mindful of your spending and seeking value in every purchase you make.

Step 7: Automate Savings

One of the easiest ways to stick to your budget is by automating your savings. Many Australians find that setting up automatic transfers to a separate savings account helps them avoid the temptation to spend. You can even split your salary into different accounts—one for bills, one for spending, and one for savings. This way, you’ll only see what’s available for discretionary spending, making it easier to stick to your budget.

If you have a specific savings goal in mind, such as saving for a holiday or a new car, set up a dedicated savings account and label it. Every time you look at that account balance, you’ll be reminded of your goal, which can motivate you to keep saving.

Step 8: Review and Adjust Regularly

A budget isn’t a static thing—it should evolve with your circumstances. Make a habit of reviewing your budget regularly, especially if there are changes in your life, such as a new job, a pay rise, or an increase in expenses. Reviewing your budget helps you stay on track and ensures that your financial goals are still realistic.

If you find that certain areas of your budget aren’t working—perhaps your grocery budget is too tight or you’re consistently overspending on entertainment—don’t be afraid to adjust. Flexibility is key to creating a budget you can stick to over the long term.

Summary - how to create a budget you can stick to

Creating a budget you can actually stick to is all about awareness, planning, and flexibility. By tracking your spending, setting clear financial goals, taking advantage of online deals, and embracing frugal living, you can create a budget that not only helps you save money but also allows you to enjoy life. Whether you’re saving for a major milestone, paying off debt, or simply trying to make ends meet, these steps will guide you towards financial stability and success.

Remember, budgeting isn’t about depriving yourself—it’s about making mindful choices that align with your goals and values. So, what are you waiting for? Start budgeting today and take control of your financial future.