Monday, 29 October 2007

New Budget Strategy – Actually Having One!

The thing that I’ve always struggled with when trying to budget is having set amounts aside for all these tiny sections of a ‘traditional’ budget. Then I came cross this post on Get Rich Slowly, called Budgeting for Non-Budgeters: The 60% Solution. It links to an article on MSN Money where Richard Jenkins explains the concept in some detail.

As November is a magical month with 3 pay periods I feel it’s a good time to test this out and tweak it to suit my situation, especially before I move over to monthly pay in December.

Tax is taken out of my pay before I get it, and my superannuation (a total of 10% now I added the extra 1% due to the pay rise) is pre-tax. I’ve fashioned my new budget on net salary for this reason rather than gross as outlined in the article.

Part 1

My budget breaks down like so:

  • Superannuation - 10% of my gross salary
  • Tax - 28% of what’s left after that

This gives me my 100% take home pay, which is broken down into:

Everyday Expenses

  • Rent
  • Electricity
  • Car, Contents & Health Insurance
  • Phone
  • Petrol
  • Public Transport
  • Debt Minimum Payments
  • Food
  • Charity

These total 75% of my take home pay

Long Term Saving/Debt Reduction

  • Debt Snowball
  • Baby Emergency Fund

These total 18%

Short Term Savings

  • Holidays, Gifts etc

This is 2%

Fun Money

  • This is for me to spend on whatever I like, such as getting my nails done, haircuts, going out, general fun stuff

This is 5% for a total of 100%

Part 2

Further to this I’ll be using the envelope method for:

  • Petrol
  • Public Transport,
  • Food,
  • Eating Out, and
  • Personal

I even found a pack of envelopes in my spare room so there’s no cost to try this out!


  1. your budget is really starting to come together! I like the idea of using percentages, it kind of simplifies it to me and gives a bit of a formula to follow.

  2. Thanks Louise!

    I like the simplicity and flexibility of the concept and I'm actually looking forward to putting it into action on Friday when I get paid!

    Is it weird that I'm excited about having a budget? ;-)

  3. Hi DD (a.k.a. Sal's cuz)

    Since Sal is such a good buddy of mine I have been enthused to think of extra ways I can help your journey.

    Have you heard of the Australian site Simple Savings? It has loads of great tips for saving money on everyday expenses. The free newsletter is terrific and I'm sure the paid members vault has enough ideas to deliver a return on investment (so to speak).

    Matt Hern
    The Financial Futurist

  4. Thanks Matt! I've actually been looking at the SS site, and the money back guarantee on the $47 annual fee makes it very tempting.

    Maybe I could give myself that as my promotion 'treat'? :-)