a guide to
budgeting
Simple steps to creating a budget
​​A budget is simply a plan for your money, a tool to help you decide how to spend and save to meet your financial needs and goals.
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A budget gives your money a clear direction. It's a flexible plan you can adjust as needed, so you always know where your money is going. Budgeting isn't about restriction it helps you direct your money towards the things that matter most to you: paying bills on time, saving for goals, or just having peace of mind.
List your income
Track your spending
Record your expenses
Compare your budget
Determine
goals & priorities
Review & adjust regularly
The first step to budgeting is knowing exactly where your money goes. Once you've got a good idea of your regular income and spending, you can tailor a budget to suit your needs.
Step 1. List Your Income
Start by listing all your income after tax. Include support from Work and Income, IRD or any other income you regularly receive. If your income changes each pay, look back over the past six months to find your average. Use how often you get paid as the time frame for your budget. For example, if you get paid weekly, set up a weekly budget.
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​​Step 2. ​Track Your Expenses
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One of the best ways to understand your expenses is to track your spending. Review your bank transactions over the last couple of months to see where your money is going.
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Step 3. Record Your Expenses​
Make a list of all your regular expenses as well as any additional or irregular spending.
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Use our budget worksheet or a simple spreadsheet to record these expenses.
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Fixed Expenses examples
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Rent or Mortgage
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Insurance
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Loan repayments
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Internet
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Subscriptions
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Any costs that remain the same
Fixed expenses are costs that generally stay the same.
Variable Expenses examples
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Groceries
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Power
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Petrol
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Eating out
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Any other costs that can change
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​Variable expenses can be more challenging to predict, but you can estimate your average spend.
Step 4. Compare Your Budget
Compare your income and expenses to see if they match up. If your expenses are higher than your income, you'll need to cut back in some areas. For example you may decide to cut back on eating out or cancel a subscription. If you have money left over, consider using it to increase your savings or pay off debt.
Step 5. Determine Your Priorities & Goals
This is where you align your spending with your financial needs and goals. This step is about making intentional choices about where your money goes rather than wondering where it went.
​Start by covering your needs first; housing, utilities, groceries, transport and other essentials. Then, allocate funds for your financial goals, whether that’s building an emergency fund, paying off debt, or saving for something specific. You can designate what’s left for fun stuff like entertainment, hobbies, or eating out.
​Be realistic with your allocations. If you love eating out, it’s okay to budget for that, but you might need to balance it by cutting back on other areas. The goal is to create a sustainable plan you can stick to. ​
Needs
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Rent/Mortgage
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Groceries
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Utilities
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Transportation
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Basic Clothing
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Insurance
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Medical
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Debt repayments
Wants
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Eating out
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Entertainment
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Holidays
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Shopping
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Subscriptions
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Hobbies
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Gifts
Savings
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Emergency savings
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​Extra debt repayments
Needs are essential expenses required for daily living.
Wants, on the other hand, are non-essential purchases. Recognizing the difference between the two can help you pinpoint where to reduce spending and boost your savings more effectively.
​Step 6. Review and Adjust Regularly
Once you have your budget set, review it regularly. Continue to track your spending. Make adjustments based on your goals and any changes in your life. Your budget can change as your needs and priorities change, but the key is knowing where your money is going. This will give you confidence about your financial future.