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Do budgets really work?

Budgets aren’t the only tool for getting on top of your cash flow. But knowing where your money goes is the first step to getting more from it, now and in the future. 

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Watch (3 minutes)

Learn to budget like a pro  

With the right tools and mindset you can get better at budgeting. Anthony from the IOOF team shares expert tips to help you grow in confidence. 

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Budgets without the boredom

Say the word budget. Maybe it makes you want to blush about your credit card balance or gives you an overwhelming urge to yawn. Even when you know a budget is good for you, tracking down all your spending and making better choices can feel like a mammoth task to take on. It can also seem like something that’s going to stop you doing what you enjoy most. But this is where you could find you’re really not getting the point of budgeting and missing out on having more fun with your money as a result.

Are budgets really such a big deal?

Budgets are the secret to making sure your money is helping you have more of what you want and less of what you don’t. So even though they’re seen as something difficult and dull, they’re actually a must-have for building a life that’s all you want it to be – unless you happen to be a multi-millionaire already.

You can certainly get by in life without a budget – millions of people do. But just like you get stuck in a job you don’t particularly like because it’s what you’re used to doing, you can also get stuck in a rut with your spending. Time and money are both finite resources and if you want to make the most of both, you’ll need to put some effort into figuring out how to earn money from a job you enjoy and how to develop the spending and saving habits that best meet your needs and goals.

Inside tip

“We’re taught that to save is to sacrifice. But having a budget is actually about choosing to have power over both your money and your time. Being smart and deliberate about what you spend now can bring you financial freedom in the future. What if you could give more time to yourself and your family instead of to your job? When you think of it like this, it can really change your perspective on what you’re buying and why.”

Getting your budget foundations right

Making a budget work for you has a lot to do with motivation. And you can also be setting yourself up to fail when you try to change everything all at once. These budget foundations are really important to get your head around before you actually start trying to change how you spend and save money. You can skip this and go straight to the part where you’ll learn how to actually set budget goals and stick to them. But with an understanding of what you’re setting out to achieve and how to make it easy, you can really boost your chances of making progress.

Budgeting seems transactional. Tracking money in and money out and trying to finish with something left over. But if you think of it that way you’re missing the point of budgeting that really motivates you. Understanding what you want most from the money you spend – your why – is what can keep you on track with your budget. It’s what can stop you from clicking buy now when there’s something in your shopping cart instead of leaving it there for 24 or 48 hours to see if it’s really that important to have this in your life.

Your why might be saving for your own home. Or the freedom to take six months off to travel, or just having some money put away to treat yourself or the people you love. Once you’ve figured out your why, remember to use it whenever you’re spending money on something that’s not essential.      

A lot of us think we’re no good with money. This is almost sure to be the case if some of our earliest experiences with money were negative. You saved up for something and then lost it or broke it soon after it became yours. Or you struggled to save at all, giving in to the temptation to buy something with your pocket money as soon as you had it. These beliefs about money can be hard to shake.

While you don’t need to be a money expert to be good at budgeting, you do need to give it some time and attention. You’re probably pretty amazing at your job or the hobby or the sport you like doing best. So if you put a little of that energy and focus into budgeting, you’ll be doing fine, even if it feels a little outside of your comfort zone.  

As human beings we really want to be accepted. Spending money is sometimes the way to get that feeling of belonging when we buy to have what ‘everyone else has.’ With a whole advertising industry – as well as social media – sending us signals about what we need to buy to belong, it’s pretty hard to ignore these. This is where the ‘why’ comes in again. Your why is yours and may not be the same as somebody else’s ‘why’. Try to remind yourself of this next time the ‘compare and spend’ signals are leading you towards choosing to buy something in order to belong.  

Budgeting can feel like a big deal but it shouldn’t have to be. Just like you wouldn’t try to run a marathon without doing any training, starting small and building up your budgeting stamina will increase your chances of success. You might have a few weeks or months when you don’t quite stick to your targets. If this happens look at it as a learning experience rather than a failure and just do things a bit differently next month to stay on track.

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Your bitesize budget cheat sheet

If you’ve ever tried to set and meet a budget across all your spending, there’s a good chance you’ve come unstuck and given up. Instead of going too big, too soon, try out one of the bitesize budget ideas in this cheat sheet. You’ll have some quick wins with your spending and get the motivation you need to try the next one. Before you know it you’ll be completely on top of your budgeting. 

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