“A budget is telling your money where to go instead of wondering where it went”
Dave Ramsay.

Budgeting. You know you should be doing it, but you probably aren’t. Why? Because it can be confronting to see where your money goes each month.

As financial advisers, we are asked by many clients to help with getting their budget back on track. It may be that they are finding they have no surplus funds at the end of each pay cycle, or they want to save for a large item such as a trip or major renovation and want to avoid needing to borrow.

Did you know?

More than 9 in 10 Australians keep track of their finances in some way and around 8 in 10 had a budget. The proportion of Australians reporting they had a budget in the last six months remained stable at 77%. Only 1 in 5 continue to report that they always stick to their budget.

Less than half of Australians have a three-to-five-year financial plan, with around 1 in 4 having a long-term financial plan. Almost 1 in 5 Australians did not save any money over the last 6 months, a consistent trend over the past 4 years. Almost one quarter (24%) of those on an income of less than $55,000 per annum were unable to save money. Also 12% report never seeming to have enough money to cover their expenses.

The Australian Bureau of Statistics Household Expenditure Survey, 2015-16 estimated that the average household in NSW spends $1,525 per week. To be an average, some families will spend more, some less. The trick is to ensure that your family is spending less than you bring home. This can be a challenge, balancing the books always is.

spending rates
The three largest contributors to household spending in Australia have been the same for many years, according to the Australian Bureau of Statistics (ABS).

ABS figures revealed in 1975, the largest contributors to household spending were food (20%), transport (16%) and housing (13%). In 2020, housing is now at the top of that list (20%), followed by food (17%) and transport (15%) respectively.

A report by Deloitte highlighted that around 37% of Aussies were concerned about their ability to cover expenses, with more than 50% indicating that they expected to pay even more on housing and energy costs going forward.

The Budget Tin

When workers were paid their wages in little yellow envelopes each week, there was a tangible element to how much you were spending. My dad would bring home the envelope each fortnight, he was a train driver, and my mum would split the cash into a tin exactly like the one below.
budget tin
They knew how much money there was for bills, groceries, mortgage etc and if there was anything left, then it was put in the bank for savings such as a holiday or Christmas. The bills all arrived in the post, not emailed. I remember the Walton’s man coming around the house each month to collect the payment of the account she had – I have no idea what she bought there.

Electronic Banking

The advent of electronic banking has made the balancing of books somewhat harder in that you can no longer see or feel cash being spent. “Tap and Go” has made money feel less real.

With electronic banking, particularly during this pandemic where cash is not being used, along with direct debits for insurance and other bills, it can be harder to see what is going in and out and make sure it is all covered.

Currently, around 1 in 10 Australians reported having paid the minimum amount due on their credit card in the last 6 months, with 4% reporting having missed payments. Over 1 in 3 Australians (32%) with a home loan paid the minimum amount on the loan, with 2% indicating they had missed payments. People who paid some money in addition to the minimum amount due on their mortgage was steady (53%).


So, this leads us to the nasty “B” word – BUDGET. A budget is going to give you an action plan and clear picture of where your money is going. It will help you achieve the goals you’re working toward—whether that’s getting out of debt, saving for retirement, or just trying to balance the books.

Most online banking platforms have a budget facility. It tracks your spending for you, the app knows who the vendors are so, apart from cash withdrawals, it knows where your money goes. It is a handy tool to see, in real time, where you are spending money, as opposed to how much you think you are spending.

If you do not use electronic banking, you can download a budget tool from the Money Smart website this will also show you where you spend money.

50-20-30 rule

One of the most well know budget theories, the 50-20-30 rule, is a money management technique that divides your bring home pay into three categories:

  • 50% for essentials: Rent/other housing costs, groceries, petrol etc.
  • 20% for savings: Savings accounts, retirement contributions, other loans, credit card payments etc.
  • 30% for everything else: Non-essential expenses like clothing, restaurants, monthly streaming subscriptions, gyms etc.

While it might be easy to remember, the rule isn’t always easy to live by. When it comes to budgets, one size doesn’t fit all. The first step is to work out where you are spending money and then see where you could be saving /cutting costs to get back in the black or get you to that savings goal faster.

If you are still wondering where the money goes, try the budget tin, or perhaps an envelope with cash for each of your categories for a few months and see which envelopes are running out.

We would be happy to help you get your books balanced or save for your goal.

Contact us and we can help get your budget under control!

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.
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