• Vertigan Partners

How To Save Money & Prepare a Budget That Works

Whether it’s for personal or business finances, having a budget is your first step to a great financial plan. When you have a budget it helps you to set financial goals and then create a plan to achieve them. Whether it’s to save money and buy a home, hit your business profit goals for 2020, save for a holiday, or just tighten things up a little, a budget is ALWAYS a good idea!



Quite often we see people go years without taking the time to really get to know their finances, and most often it’s because they are hiding from the reality of their spending habits. But instead of getting to the end of the year and wondering why you still don’t have a deposit for a home, you didn’t go on a holiday, you don’t have any savings, or you didn’t hit your business profit goals, take the time to get to know the in’s and out’s of your finances and set some goals/targets to stick to and you will start to feel like you have control over your finances and what happens with your money.


So… how do you prepare a budget? It’s actually not too hard to do! There are about 5 main steps to follow and we’ll cover them below for you. Find some time this week, to sit down for a few hours and get everything down. If you have other people such as a business partner or life partner remember to include them too, so you can determine your finances together as a team!


1. Decide On A Time Frame

Before you do anything else, you first want to decide what time frame you want to base your budget on, is it weekly, fortnightly, or monthly? Depending on your circumstances, how regularly you’re paid or if it’s for business or personal finances will depend on which time frame you go with. For personal finances, it’s easiest to base your budget around how regularly you are paid, if your pay cycle is weekly then budget weekly. If it’s for business budgeting, a lot of businesses like to base their budgets on a monthly time frame.


TO DO: Determine your time frame.


2. Determine Your Income

Of course, we first need to know what’s coming in so then you can work out everything else! If you’re preparing your personal finances this is pretty straight forward as it’s your salary plus any other income such as dividends, rental income, child support, etc. If your salary is variable just go with an average of what it has been for the last 6 months. For business finances, it may be predictable for some businesses what you will earn in a month if not set yourself a minimum to start with and you can increase it as your business grows.


TO DO: Make note of all your income streams.


3. Determine Your Fixed Expenses

There are two different types of expenses when it comes to budgeting, the first is your fixed expenses. These are the expenses that always remain the same each week/month. Things such as mortgage repayments, rent, insurance, rates, phone bills, subscriptions, or your salary (if you’re doing a business budget). These are expenses that remain the same no matter the circumstances.


TO DO: Write down all of your fixed expenses.


4. Calculate Your Variable Expenses

The second type of expense is your variable expenses. These are expenses that can fluctuate on a regular basis and if it’s your business they are the type of expenses that may increase as your business gets busier. For personal finances, these are things like fuel, groceries, sports memberships, school fees, entertainment (going to movies), alcohol, eating out, electricity, gifts, shopping, coffees, credit card debt, etc. For a business budget these are things such as wages, materials, utilities, fuel, etc. Go through your bank statement for the last 3 months and make note of all the different areas you spend money on a regular basis.


TO DO: Write down all your variable expenses.


5. What’s The Difference?

Now you know what’s coming in and what’s going out on a regular basis, it’s just a matter of doing some simple math! Take your income, and deduct your expenses (both variable & fixed), what you’re left over with is what you can save, or in other words is what your profit is! Now this is the point that a lot of people might be thinking ‘I need to change some of those expenses OR make more money, because I’m not liking that final number!’ and that is great! Now you’re aware of where your money is being spent and how much is coming in, you can start to make a conscious effort to improve your finances!


TO DO: Make note of your current bottom line.


Make Adjustments


Alrighty friends, now you’re aware of the reality of your finances. You may be absolutely stoked and happy with the final number, but our guess is you’re reading this blog because you never seem to have any money left at the end of the week. The good news is, there’s probably a heap of ways you can make improvements to the bottom line, and no doubt you already picked up on a few when you started listing your expenses.


Fixed expenses can be a little harder to make improvements on, but it's always worth trying.

  • You may be able to shop around for a better interest rate or refinance for your mortgage repayments.

  • You could negotiate better prices for rent, insurance or your subscriptions. Paying in bulk or advance can sometimes help to get a better rate. Shop around because there might be somewhere else you could take your money if you can find a better price.


Variable expenses are going to be where you can get things under control a lot more. What areas did you notice you were spending a lot more money than you thought you were?


For personal finances:

  • Do you need to prepare lunch instead of buying it each day?

  • Do you need to cut back on your shopping habits?

  • Can you do your groceries once a week to plan your food and cooking better?

  • Is your car not very economical and would you be better off with a smaller car?

  • Are there subscriptions you’re paying for that you’re not using?

  • Can you eat out less and cook more meals at home?

  • Can you switch to cheaper brands for products you regularly buy?


For business finances:

  • Research to see if you can find cheaper materials.

  • Is there a more productive way for your team to work or travel?

  • Can you negotiate a better rate for rent or utilities?

  • Is it worth paying for some expenses in bulk to get a better price rather than monthly?


Set A Budget

Okay! We’re finally at the budgeting stage! We find it easiest to do this in a spreadsheet. Make a list of your income, then all your expenses, and set it up to calculate the bottom line for you. Determine what your goal is for each different area of your expenses and perhaps also a goal for your income if you’re working to increase your income too. If you have decided you want to cut back in some areas, determine exactly what you will spend and write it down! Now have a look at what the bottom line will be if you can stick to your plan! This is exciting! Do the maths and determine how much that will mean to you in savings or profit if you can continue that for 6-12 months!


Stick To It & Check Back Regularly

Now for the final but most important part of the budget, you MUST stick to the plan AND check-in on a regular basis. There’s no good in creating a budget, getting excited about the possibilities, but then turning a blind eye to it and pretending like everything will sort itself out. We hate to sound like Dad… but it won’t work!


The budget may require a little adjusting as you go when you realise you have set expectations far too high for yourself and you can’t stick to the budget. Whatever time frame you based your budget on, make that how often you check in on your budget. Literally write down every.single.expense that left your bank account in that time frame. Allocate it to the areas of your budget where they belong, and see how you’re tracking. Some weeks you may notice you feel right on budget, some weeks you will go over and other weeks you will be way under. As you do this exercise regularly you will start to value your money and most importantly the time you spend working more!


BONUS - 11 Quick Tips To Save Money & Manage It Better

  1. Shop around and do your research for a better price.

  2. Setup weekly direct debits for your fixed expenses, rather than being hit with insurance, rates, and everything else each quarter.

  3. Pay off credit cards ASAP to stop paying interest.

  4. See a finance broker about refinancing.

  5. Find different ways to socialise without spending money. Walking instead of coffee, a dinner party at home instead of eating out. Camping trip instead of a booze weekend.

  6. Write shopping lists and stick to it, or better yet do click and collect!

  7. Look for second hand. Buy second-hand furniture or go op-shopping, more often than not you’ll get better quality anyway!

  8. Unsubscribe! If you’re tempted by marketing emails, unsubscribe, and remove the temptation!

  9. Wait 30 days! Decide you want to buy something of value? Wait 30 days and sit on it and then decide if you still need it.

  10. Make budgeting a habit! You’ve set your budget using our tips above, now it’s important to make it a habit by checking it regularly and sticking to it.

  11. Write down your goals. What are you saving for? Remind yourself every.single.day! Then when you go to buy ‘that dress’ or order entree, you might think twice if it’s going to slow you down from getting to your goal!

If you would like support with managing your finances and setting up some automated systems for finances and budgeting, get in touch with our team today who are experts in finance automation and budgeting! Call us on 6424 4021 for a no obligations chat about your situation!


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