Is budgeting one of your new year’s resolutions? Well, we asked Elston Strategy Adviser, Dean Ireland for some tips on how to make a budget you can stick with right through 2022. As you can see from Dean’s answers, if you start with the right attitude, you’ve got a good chance of staying on the right track.

Set budget goals you can live with.

One of the main reasons people abandon their budgeting goals is they’re too ambitious. Instead of trying to knock it out of the park, aim for a solid performance week after week. When you set realistic goals, you can string together a series of small but significant achievements. Success after success makes you feel good and encourages you to keep going.

Be realistic about the timeframe.

There was an old shampoo ad that told us ‘It won’t happen overnight, but it will happen.’ You should bring the same attitude to budgeting. Don’t expect miraculous results overnight. That’s only going to lead to disappointment.

Don’t penny pinch the plan.

There’s often a temptation to draw up a budget that’s calculated to the last cent. This might seem like the right thing to do, but you’ve also got to allow for the curve balls life is sure to throw your way. And if there is an unexpected blowout, give yourself a break. Be flexible enough in your thinking, so that you’re able to shrug off a bad month and move on.

Step it up gradually.

Success starts with establishing a habit. Focus on the routine at the beginning, not so much the numbers. Once you’re comfortable with the discipline and it becomes second nature, then you can step things up. Gradually increasing your goals over time is definitely easier than charging ahead from the start.

The worst-case scenario works best.

Apply the most expensive bill period to the full year. Leave out the bonus you think you’re likely to get. Double your mortgage interest rate to see if you can afford the repayments. If you apply worst-case scenarios like these into your planning, your budget should be easier to achieve and therefore have a better chance of working.

Can you handle the truth?

Sometimes budgeting is too personal to allow for objective thinking. When this happens, our true spending habits are never really confronted. A good financial planner can help you to do just that. Ultimately, a planner can uncover your true spending and help you create discipline by holding you accountable.

Review your plan twice a year.

You should review your budget every six months or when you reach a milestone. You could hit a savings target, get a pay increase or change your circumstances, any of which would lead to a review of your budget. Remember not to be hard on yourself as a budget should be kept flexible, but monitoring your progress is always important to ensure you remain in control of your cash flow.

Pass your habits onto the next generation.

Managing cash flow is the cornerstone of wealth creation. So, if you can get it working for you, that’s going to be good for your children too. Get them into the habit of budgeting when they land their first job. It doesn’t matter how they’re paid, money is money and learning how to use it early will only benefit them in the long run. Starting young will also allow them to understand tax and superannuation, as these two items will be an automatic deduction from your income.

Need some guidance?

Many people find it easier to stick to a budget created by a third party. Elston can help you create a realistic budget to help you reach your financial goals. If you’d like some professional help, please contact us on 1300 ELSTON and arrange to talk to one of our financial planning experts.