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How to Plan Your First Budget and Stick to It

Updated on June 22, 2011

Who am I to tell you how to spend your money, save your money or whether or not you should be paying off your credit cards? What do I know about budgeting that could make the slightest bit of difference to you and your individual circumstances? I’m living quite comfortably, thank you, so why should I be concerned about how you choose to live or if you even understand what the phrase ‘sticking to a budget’ represents?

As I stated in the first paragraph, I’m living quite comfortably. But that was not always the case. It has only been through careful and diligent attention to my personal finances, some forward planning and tweaking the budget when necessary.

Why Am I so Concerned about your Personal Finances?

For the past 30 years my life has revolved around other people’s finances. As a bookkeeper, I earned my living from working out budgets for individuals, small business owners and non-profit organisations.

Planning a Budget is Easy

Planning a budget is probably easier than you think. The preparation is certainly easier than sticking to a budget. Start with the income that is guaranteed, in other words the weekly, fortnightly or monthly pay you can rely on. Calculate how much this is for the year giving you a total for the yearly or annual income.

Guaranteed Income 
Yearly Income 
Example 1 
Weekly Pay  
Multiply x 52 
Example 2
Fortnightly Pay 
Multiply x 26
Example 3
Fortnightly Pay  
Multiply x 12

The next step is to look at how you spend your money. There will always be those fixed items that you have little control over. Rent, board, school fees, union fees, health insurance, and car payments are examples of fixed costs. The only thing that may change here is that any of these items can increase. Calculate the yearly expense total the same way you have worked out your income.

Fixed Costs 
Yearly Total 
Rent or Board 
Paid Weekly 
Multiply x 52 
Union Fees
Paid Fortnightly
Multiply x 26 
Health Insurance
Paid Monthly
Multiply x 12
Total Costs for the Year

It is only at this stage that you can work out how much you have left for spending. With a definite yearly income of $5,200 and fixed costs of $2,810 in this example, there is only $2,390 left to cover all other costs. Divide this figure by 52 and you are left with just under $46 per week.

Let’s say you have decided you want to save $1,000 by the end of the year so you can put a deposit on a car loan. This will calculate to another $20 per week leaving you with a grand total of $26 per week for food, entertainment, phone, internet, coffee, clothes and the list goes on. Apart from the fact that we’ve started with an unrealistic weekly pay, there are some serious flaws in this budget.

The current income will never sustain the costs associated with living. It is only now that additional income should be considered. Some of these might be overtime or tips. If your current rent is too high there might be a chance to sub-let one of the rooms in your apartment. If the numbers still don’t add up the only alternative is to find part-time work.


Fixed Income 
Fixed Costs 
Left over  
Planned Savings

Sticking to a Budget Takes Commitment

The sad news is there is no easy formula for sticking to a budget. It takes commitment. Set yourself a goal, something to strive for so there is motivation and a reward at the end of a given time. Keep an eye on your progress by looking back to see how far you have come. There will be constant movement in your budget but don’t lose heart. Anything that wasn’t planned for the first time can be included when you revise your budget.

Additional Income 
Decrease Spending 
Walk to work 
Less Take Outs 
Part Time Job 
Shop for 2nd hand clothes 
Sub-let Apartment
Cut up credit cards
Add to your income or decrease your spending
Sticking to your Budget
Sticking to your Budget

Youth Need not be Wasted on the Young

Don’t become a statistic to the George Bernard Shaw ideology. George claimed ‘Youth is wasted on the young’. I’d like to think there are many astute young people out there who can rise above this philosophy when it comes to managing their personal finances. If all it takes is a well thought out budget and some common sense, I have every faith in the youth of today. Go for it. Set your goals and check them off day by day. Sticking to a budget may be easier than you think and you may be pleasantly surprised at the results.

Copyright © 2011 Karen Wilton


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    • Karanda profile image

      Karen Wilton 6 years ago from Australia

      b. Malin I am so pleased to know you are enjoying your hard work now. A little thought and planning early and the rewards can be enormous.

    • jagandelight profile image

      jagandelight 6 years ago from Florida

      budget, I never really did one on paper just try to do it in my head from paycheck to paycheck and of course that doesn't work. I am starting all over again in life and i want to do things differently, have a plan and goal this will take discipline to get into and keep at it but with God's help i know it will be done. Thanks for the hub i will use it as a reference point as i go forward.

    • b. Malin profile image

      b. Malin 6 years ago

      Even though we are passed this stage...we've done our homework over the years and now are enjoying all the planning and saving we did. I guess you could say, we budgeted right. Thanks for an excellent Hub and your research.