Cost of living pressure might have caused you to do what you have never done before.
For the first time, you are trying to get your household finances in shape – with a budget.
On this practical episode of Money, accountant Pete Burrows argued that every single one of us should have a budget.
Cohost Ben is skeptical but Pete offered a common comparison that we all can sink our teeth into.
“It’s more helpful than hurtful to have a budget,” Pete said.
“It’s a bit like going to the dentist.
“You don’t have to do it but it is preventative, and you get better long-term outcomes.
“There can be no downside to having a budget and knowing the truth, as dirty and ugly as it may be.”
Makes sense, you think. But where do you begin with a budget?
First things first
Pete said the place to start any budget is being brutally honest about what you spend and how often.
“A family budget needs to start with where I am at now,” Pete said.
“What am I actually spending now.
“It’s as old fashioned as looking at your bank or credit card statements for the past few months.
“… Work out what your income actually is – and then start with [all] that.”
Pete said most of us can break our financial responsibilities down to 20 or 30 items, from food shopping to health insurance or streaming subscriptions.
The value of a good budget
As you assess your true financial situation and use resources to shape a budget, Pete brought up a key ingredient that we often overlook.
Our budget is not just about money. Something deeper and more profound is going on with our budget, even if we don’t realise it.
“If you looked at [your budget] and thought that none of this actually reflects what I think is important in life… I think you need to have another look at it,” Pete said.
As you begin your budget, make sure that your values and priorities are reflected within it.
Such a framework of worth supports your budget to be an empowering tool for using money well, not flippantly.
Listen to the full Budgeting 101 episode in the player above or wherever you get your podcasts.