A budget is an excellent way to manage the money you earn.

Basic money management is about meeting your family’s everyday expenses, handling unexpected bills and saving for the future. It can put you in control of your money, which helps you avoid stress and feel more secure.

Communication in your family plays an important role in managing money well. Honest conversations with your partner, if you have one, can help to avoid conflict about money. And involving children in planning and budgeting can make it easier to achieve savings goals together.

A family budget: why it’s a good idea

A family budget is essential to managing your money.

That’s because a family budget helps you:

• spend your money wisely on the things you must have – these are your needs
• save money for the things you like but can live without – these are your wants
• set aside money for unforeseen expenses – for example, if your car breaks down and needs repairs
• stop accidental overspending.

Working out how much money you need for everyday essentials like food, housing, utilities like gas, electricity, phone and water, transport and medical services can help you make sure you have enough for unexpected expenses and emergencies.

Budgeting can help you and your family take the first step towards control of your money. It can also help you avoid debt. And it lets you get on with enjoying family life, rather than spending too much time worrying about your finances.

Getting started with budgeting

The key to budgeting is sticking to a basic rule – spend less than you earn.

One way to start budgeting is to list what you earn, spend money on and owe. It can help to look at past salary statements, benefit statements, bills, bank statements and credit card statements. If you spend or earn money any other way, be sure to look at this too.

Try to look at enough bills and statements from the past year to understand your usual earning and spending habits. It’s good to look at how some bills are higher at different times of the year. For example, energy bills are often higher during winter because of heating.

After you’ve accounted for essentials and emergencies, your aim is to have money left over to spend on things you want.

Budget planners and savings calculators can help you get on top of your family budget. You can find many simple, free budget planners online.

Working out what you spend: the first step towards managing money

One of the hardest things about making a budget and managing money can be keeping track of what you spend.

Spending can be regular (fixed expenses) or irregular or once-off (variable expenses).

Here are some of the fixed expenses you might want to include in your family’s budget:

• mortgage repayments or rent
• utilities – gas, electricity, water, phone and internet
• council fees and land taxes
• school or tertiary study fees
• health, car and household insurance
• public transport costs
• credit card and personal loan repayments.

Here are some of the variable expenses you might want to include in your family’s budget:

• food
• home maintenance and household goods
• school uniforms, textbooks and stationery
• medical and dental fees
• car repairs and petrol
• personal items like clothing and haircuts
• registration fees and equipment – for example, for sports, music or dance programs
• holidays
• entertainment
• gifts – for example, for birthdays or weddings
• other things like special treats for you and your family.

If your income allows, deliberately overestimating the money you need for bills might help you find extra spending money.

Planning how and what to save: a key part of managing money

Your budget will tell you whether you’re currently spending more or less than you earn. If you’re currently spending more, it can help to sit down together as a family and think about where you can save money. And if you’re already spending less than you earn, you can look at how to save and how to use your savings.

Here are some tips for making a savings plan:

• Review your spending. Figure out whether you’re saving as much as you can. Could you spend less on certain items? Do you have any high-interest credit cards or other loans? Could you pay these off as soon as possible and look into more suitable credit or loan options? It’s a good idea to do this regularly.
• Build a savings buffer. Before you start saving for your wants, it’s really important to keep extra savings for financial emergencies. For example, you could aim to keep some money in a separate savings account for emergencies.
• Decide what you’re saving for. What are your goals? How much do you need to save to achieve them?
• Set a deadline for your goal. Give yourself plenty of time – saving can seem to take forever. But be realistic, and you’ll avoid feeling pressure.
• Open a fee-free bank account, which is separate from your main account. You can use this account only for saving towards your goal. You can set up a direct debit from your main account to regularly transfer a set savings amount.
• Look into other options, like asking your employer to split your salary payment, so some of it goes into your separate savings account.
• Speak to your bank, financial institution or financial adviser if you want more advice.

Once you’ve come up with a savings plan, it’s a good idea to review the pros and cons before you start. This way you’ll know how it’ll affect your family life. If there are parts of your plan you’re unsure about, seek advice or double-check your calculations before you go ahead.

If you’re not confident about managing your money or you need help getting your finances under control, you can use the Australian Government Financial Information Service. This service is free and available to everybody. Or you could look into choosing a private financial adviser.

Being good with money is about more than just making ends meet. Don't worry that you're not a math whiz; great math skills aren't really necessary - you just need to know basic addition and subtraction.

Life is much easier when you have good financial skills. How you spend your money impacts your credit score and the amount of debt you end up carrying. If you’re struggling with money management issues such a living paycheck to paycheck despite making more than enough money, then here are some tips to improve your financial habits.

When you’re faced with a spending decision, especially a large purchase decision, don’t just assume you can afford something. Confirm that you can actually afford it and that you haven’t already committed those funds to another expense.

That means using your budget and the balance in your checking and savings accounts to decide whether you can afford a purchase. Remember that just because the money is there doesn't mean you can make the purchase. You have also to consider the bills and expenses you'll have to pay before your next payday.

1. Have a budget: Many people don’t budget because they don’t want to go through what they think will be a boring process of listing out expenses, adding up numbers, and making sure everything lines up. If you’re bad with money, you don’t have room for excuses with budgeting. If all it takes to get your spending on track is a few hours working a budget each month, why wouldn’t you do it? Instead of focusing on the process of creating a budget, focus on the value that budgeting will bring to your life.
2. Use the budget: Your budget is useless if you make it then let it collect dust in a folder tucked away in your bookshelf or file cabinet. Refer to it often throughout the month to help guide your spending decisions. Update it as you pay bills and spend on other monthly expenses. At any given time during the month, you should have an idea of how much money you’re able to spend, considering any expenses you have left to pay.
3. Give yourself a limit for unbudgeted spending: A critical part of your budget is the net income or the amount of money left after you subtract your expenses from your income. If you have any money left over, you can use it for fun and entertainment, but only up to a certain amount. You can’t go crazy with this money, especially if it’s not a lot and it has to last the entire month. Before you make any big purchases, make sure it won’t interfere with anything else you have planned.
4. Track your spending: Small purchases here and there add up quickly, and before you know it, you’ve overspent your budget. Start tracking your spending to discover places where you may be unknowingly overspending. Save your receipts and write your purchases in a spending journal, categorizing them so you can identify areas where you have a hard time keeping your spending in check.
5. Don’t commit to any new recurring monthly bills: Just because your income and credit qualify you for a certain loan, doesn’t mean you should take it. Many people naively think the bank wouldn’t approve them for a credit card or loan they can’t afford. The bank only knows your income, as you’ve reported, and the debt obligations included on your credit report, not any other obligations that could prevent you from making your payments on time. It’s up to you to decide whether a monthly payment is affordable based on your income and other monthly obligations.
6. Make sure you’re paying the best prices: You can make the most of your money comparison shopping, ensuring that you’re paying the lowest prices for products and services. Look for discounts, coupons, and cheaper alternatives whenever you can.
7. Save up for big purchases: The ability to delay gratification will go a long way in helping you be better with money. When you put off large purchases, rather than sacrificing more important essentials or putting the purchase on a credit card, you give yourself time to evaluate whether the purchase is necessary and even more time to compare prices. By saving up rather than using credit, you avoid paying interest on the purchase. And if you save rather than skipping bills or obligations, well, you don’t have to deal with the many consequences of missing those bills.
8. Limit your credit card purchases: Credit cards are a bad spender's worst enemy. When you run out of cash, you simply turn to your credit cards without considering whether you can afford to pay the balance. Resist the urge to use your credit cards for purchases you can’t afford, especially on items you don’t really need.
9. Contribute to savings regularly: Depositing money into a savings account each month can help you build healthy financial habits. You can even set it up so the money is automatically transferred from your checking account to your savings account. That way, you don’t have to remember to make the transfer.
10. Being good with money takes practice:​ In the beginning, you may not be used to planning ahead and putting off purchases until you can afford them. The more you make these habits part of your daily life, the easier it is to manage your money, and the better off your finances will be.

Without money management, personal finances are a bit of a mystery. This can lead to overspending and living paycheck-to-paycheck. Money management can help you have a better handle on your income and spending so you can make decisions that improve your financial status.

You can improve your money management by regularly evaluating what you're doing with money and making changes that make sense for you. For example, if you don't have a budget, you could start by developing one. If you have a budget, you could track your spending and see how it lines up with your budget. Once you have an idea of your income and spending, you could choose to increase your savings, pay off debt, or start investing based on your financial goals.