50% - needs and essential living expenses like rent, bills and groceries.
What's a budget?
It's a plan for how you'll manage your money to achieve your goals. Whether you're wanting to get on top of your money day-to-day, be prepared for a rainy day, or work towards other savings goals, a budget is a great place to start.
Creating a budget can help you feel more in control of your money, by helping you understand how much you have to spend and save each month.
Ready to get started?
Decide which budgeting method will work best for you. Here are two popular methods to consider:
- 50:30:20 - A simple way to get started with budgeting. The idea is to allocate a percentage of your income each payday to needs, wants and savings. For example, 50% to cover your needs, 30% to your wants and 20% to savings and/or debt.
- Traditional budgeting - A slightly more detailed budgeting method. It helps you work out exactly how much money you've got coming in and how you'll spend it across different categories.
We'll go into more detail below for you.
Keep it simple
Here's what the 50:30:20 method might look like.
Work out what you think you need for your essentials, spending and savings. You can always tweak the percentages so they work for you. For example, if your essentials are higher than 50%, you might like to try a 70:20:10 split.
To help make this budget easier to track, set up separate accounts and each payday put the allocated percentage into the appropriate account.
Change things up so it's realistic for you. For example your 20% savings could actually be 15% that goes into a rainy day account and 5% into holiday savings.
30% - wants like eating out, and lifestyle costs like going to the gym and buying clothes.
20% - savings, your emergency savings, investing, or making extra KiwiSaver contributions.
Getting into the detail
The traditional budgeting method helps you work out how much money you've got coming in and how you'll spend it across the different categories. That way you can be more confident your money will last from payday to payday, and you are progressing towards your goals.
To get you started, we've got a budget template you can fill out.
Start by adding up everything you earn and spend in a month (or pay cycle, whichever makes most sense for you). This includes everything from rent, groceries, bills, to your subscriptions, eating out, doctors visits and more. We have tools to help:
- Spend Tracker automatically categorises your spending each month.
- Card Tracker helps you keep track of subscriptions on an ASB Visa card.
Once you've done that you can see if there's any spending you want to cut back on. You can also see how much money you might have left at the end of each month, ready to put into savings, or get debt free faster.
That's your spending and saving plan!
Tips for sticking to your budget
-
Be realistic
Sometimes we try to reach our savings goals faster by cutting back hard on spending. Include some treats in your plan if you can afford it, and try not to stretch yourself too thin. -
Be flexible
Things change, and your budget can too. Review it frequently, and if you find your budget isn't working any longer, tweak it rather than giving up on it. -
Track how you're doing
Check your spending against what you planned to spend. If you overspent, look for ways to cut back. If you have money left over, you could allocate it to savings or repaying debt. It's great to keep track and look for ways to create smarter spending habits.
Make budgeting simple with money buckets
Organising your accounts can help you stick to your plan. With money buckets each account or ‘bucket' has a specific purpose. If you're using the 50:30:20 budgeting method, you could start with three buckets. If you're using the traditional budgeting method, you may find more buckets useful.
Here's one way you could organise your money buckets.
1. Income bucket
This is where all your money goes when you get paid.
2. Needs bucket
The bucket to cover your essential expenses, that you need to pay each week/month. Over time you'll want to build up some surplus in your essentials account to cover the less frequent bills, like your car registration or doctor's visits, or create a separate bucket for these.
3. Wants bucket
This one's for guilt free spending and enjoyment, like hobbies, entertainment and shopping.
4. Rainy Day savings bucket
This bucket is for emergencies and unexpected costs. You could aim to have $1000 set aside, or try our Rainy Day Savings calculator to see what might be a good amount for you.
5. Savings goal bucket
This could be savings for things like Christmas shopping or a family holiday, and you could have a bucket for each saving goal.
Tips for using money buckets:
- Visa Debit card - have a Visa Debit card for each spending account to make sure you spend from the right bucket.
- Set up alerts - worry less about running out of money with account alerts that let you know when your balance gets below a set amount.
- Personalise your accounts - identify accounts and goals by personalising your account names and images.
- If you're using a credit card - stay on track by repaying from the appropriate buckets. For example, if you spend $200 on groceries, transfer that from your needs bucket to your credit card.
- Create a buffer - build up some extra money in your needs account to cover infrequent expenses, or bills you’ve forgotten to budget for.
Extra help if you need it with ASB Support Finder
We all need a bit of help sometimes. ASB's Support Finder is here to help you find financial support that might be available to you and your family.
The information and tools suggested are intended to provide general information only. It is not financial advice and does not take into consideration your personal needs and financial circumstances. You should consider seeking financial advice before making any decision based on this information.
