Three important principles of maintaining a consistent and effective budget are prioritising, using schedules, and creating goals to help establish personal habits that drive towards a more secure financial awareness.

First of all you will need to create two different schedules in a program like Microsoft Excel. The first one will outline NET payment dates for your personal or household account. In other words, the total amount available after each payment period.

The second schedule can be split into two categories - one for payments that are mandatory such as bills, and the other for personal items that can be classified more as "wants" than as "needs". You can then allocate a fixed amount available to each person in the household to spend in the period of one week. This can be decided once all the payments in the "needs" list are identified and plotted in Excel. At this stage there should be a clear table of all the payments that will need to be made over the next period including dates.

You should allocate at least an extra 10% for more expensive "need" items in the costs list. For example if one of the items is a telephone bill that tends to be about $70 each month then it is a good idea to write $80 instead in case someone uses the telephone more that month. It is not a good idea to go over the budget, instead allocate a little bit extra for each item where possible in case one of them ends up costing more or something unexpected comes up. You can call this the 'savings buffer'.

You should be prioritising some sort of financial goals prior to having a budget. Here are some examples of some goals:

Save X amount each month Put the X amount into the mortgage Have at least X left over to spend at the end of each week

To achieve one of these goals there is the option of reducing the allocated amount from the "wants" list. There is also another option to eliminate items from the "needs" list. To eliminate items from the "needs" list first ask what makes the things on that list classified as needs.

Explore dependencies

To determine whether a need can be eliminated ask the question "what does this depend on?" So for example, petrol and dish washing liquid each have dependencies. One depends on having a car, and the other depends on having a dishwasher. You might be able to find that some of the things in the household are using up a lot of the budget through their dependencies when there might be cheaper options available to achieve the original task.

Make sure that at this stage the final costs in both lists adds up to a figure that still allow the goal selected (as discussed above) to be met. If the goal cannot be met then reduce the initial goal to a lower number.

The most fundamental aspect to achieving a habit of success is to focus on rewards when something is being done right. Each period that you achieve that goal you've set out rewarding yourself by purchasing something you've wanted for a long time, or go out to dinner, but do not spend more than what the excess of the goal was.

For example if the goal was to save $500 at the end of the month and the final savings were $650, then spend the $150 as a reward. On the other hand if the savings were $400 - then subtract $100 from the "wants" allocation for next month until the goal is being achieved on a consistent basis.

Disclaimer: I do not have professional experience in financing. The background I have is more based in goal-setting and helping people develop more successful habits. This article is not a substitute for professional accounting advice.

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