How to write a budget

IIt’s boring, but having a written budget can really help you to stay on top of your expenses. t’s boring, but having a written budget can really help you to stay on top of your expenses.

Why? Because seeing them all written down, in black and white, is a great reminder of what you’re meant to be spending our money on. In the same way as having a food diary can help people to lose weight, having a money diary (aka a budget) can help people to save money.

How to write a budget

It stands to reason that the more detail you have in your budget, the more accurate it will be. So print out approximately three months’ worth of bank statements; every statement for every account that you have. Assemble all these statements, firstly in account order (to make sure you are not missing any), and then into date order.

Next you need a budget spreadsheet. There are some terrific online budget calculators available; Canstar has one here, or try the Sorted Money Planner. Or you may have a different online budget planner that you would prefer to use.

Whichever budget you end up using, there are likely to be some common spending categories, such as:


Income is everything that you earn over the course of a year. Your wages/salary, commissions, bonuses, share dividends, interest on savings, regular overtime, government benefits and tax refunds.

Fixed expenses/Regular expenses

Fixed expenses are things that are, surprisingly enough, fixed. Expenses like mortgage repayment, rent, rates, utilities (gas, electricity etc), insurance premiums, petrol, car costs, groceries, subscriptions and memberships  — you get the point, these are the expenses that don’t change much. Even if the monthly amount varies, the yearly amount is pretty much predictable. These are expenses that are by and large necessary — like Christmas, tax and relatives that are hard to avoid.

Discretionary expenses/other expenses

As the name suggests, discretionary expenses are something that you incur by choice. To a large extent the amount that you spend on these items is entirely up to you. Examples are gifts, entertainment, hobbies. By saying that it is your choice to incur these expenses I don’t mean that you shouldn’t be spending money on them. You have to buy gifts. You have to go out. But whether you spend $20 or $200 is up to you.


Do you have any regular savings plans? Are you, for example, putting extra money into your Kiwisaver, or perhaps putting a bit extra away into a cash account or term deposit.

We have gone through the theory; now let’s put it into practice. Get your bank statements and your budget template and we’ll start applying one to the other.

The way to do this is to go through each bank statement, line by line. Every single transaction on every statement — both credits and debits — should be able to go somewhere in your budget. It is up to you to remember what each transaction was for. Credit card and EFTPOS are generally easy as the payee is listed beside the transaction. Cash withdrawals can be harder but three months should not be too long a timeframe to stretch your memory over.

Add in annual/six monthly costs

Once you have been through each bank statement line by line, and have put all the information somewhere in the budget, have a quick look through it to see if there are any annual expenses that you have paid over the relevant three-month period. If so, divide the amount paid by four (there are four quarters to each year) and change the figure in your budget to that amount. So for example, if you have paid your annual car registration of $400, divide this by four and put the $100 figure into your budget.

Next, multiply your budget totals by four.

Then have a think about any possible income that isn’t listed on your budget yet. It may be something like a tax refund, commission, bonus and so forth. If there is anything you can think of, add it into your annual figures.

If there are any annual expenses that you haven’t paid during the three-month period, work out what they are and put them into your budget.

Congratulations! You now have a pretty accurate picture of how much you earn and spend each year. Compare the ‘how much you earn’ figure with the ‘how much you spend’ figure. How does it look? Is it a negative figure or a positive one?

Either way, knowing where your money is going will help you to identify ways to save – and here are 30 ways to save, to get you started.

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