How to start a budget and why it's important

What is a budget?

A budget (or money plan) is really just a simple plan for your spending.

Essentially, your money plan:

• Helps you steer your money and stay confidently in control
• Shows what money you expect to receive and how you expect to spend it
• Helps you flow your money towards your goals
• Is one of the best tools for getting the most out of your money and getting ahead. 

How to build a budget

To create a budget, start by adding up how much money is coming into the household (your moni whiwhi), and how much is going out (your spending), then work out the difference.

Making a plan for your spending is easy with our budget planner – give it a try!

You will either have money left over (a surplus) or not enough money to cover your spending (a deficit). The aim is to make as much of a surplus as possible so you have money left in your pocket to save for your goals or pay off debt faster.

If you usually spend less than you earn…

You can use a budget to work out how much you can save each payday and flow this towards what you want. We call this ‘paying ourselves first’.

If you usually spend more than you earn…

You can use a budget to see where that extra money is going, and how much you are spending on your debt. You can also see if there are ways to spend less or earn more.

A good budget can make it much easier to manage your money and reach your financial goals.

The best budgets keep getting better

Keep tracking your spending 

After setting a budget, it’s helpful to track your spending to see how it’s working. This way, you can see what's working and refine it over time.

You could try a spending diary or use an online tool or smartphone app. Setting up different bank accounts to manage your budget can work really well too.

Making the most of your income

Budgeting isn’t just about watching our spending. How much we earn also affects whether we have money left over for saving towards our goals or paying off debt. So part of our plan needs to include goals for growing income, too.

People’s needs typically increase over the years. And if our income doesn't grow, we effectively earn less each year just because of tāmi ahumoni (when prices go up and our dollars buy less).

The Careers New Zealand website has broad salary information for different types of jobs.

Online job sites and salary survey reports also show what someone in your position with the same experience and skills should be earning. You can also contact recruitment agencies to find out what similar roles are currently paying.