Personal Budget: Why, Where, How


Everything you need to know about personal budgeting: why you need a personal budget, how to setup your household budget and where to track your budgeting progress.

Did you know?

The word ‘budget‘ first appeared in 15th century and meant “leather bag, wallet or pouch”.

Why Have a Budget?

Despite our best intentions, it is hard to hold on to your cash.

There are so many interesting things to do, holidays to go on, products to buy, restaurants to visit that it is hard to say NO.

Do your spending habits look like this?


However the stark reality is that if you don’t save for your future, there is a good chance you won’t reach your retirement goals.

Don’t Fall Short

A good target for your super fund should be $1,000,000 when you retire (this would provide an annual income of $50,000, assuming a 5% p.a. investment return after tax and inflation)

The below chart demonstrates that you will be well short of your goal of $1 million if you rely on your super contributions alone.

CHART: Projected super savings at retirement (age 67), according to annual wage


*Source: vpr modelling using ASIC method for static retirement income projections. Balances are based on 37 years in the workforce and the Super Guarantee rising to 12% under the current timetable.

We’ve Got it All Wrong

What if I said there was still a way you could do all those amazing things, while meeting your savings goals as well?

Well there is, and it comes down to how you picture your income:

  • Save first, or
  • Spend first.


”Don’t save what is left after spending; spend what is left after saving.”

Warren Buffett

How: My Favourite Personal Budget

The personal budget structure I recommend to my family and friends is the 20/30/50 budget.

Allocate each pay check as follows:

  • 20% to savings
  • 30% to wants
  • 50% to needs

It is simple and works well for everyone, no matter their income or spending habits.

DIAGRAM: The 20/30/50 Budget


Suggested Items for Each Account

Savings (20%)
Consider one of more of the following (ranked from low risk to high):

  • An online savings account
  • Acorns investment account
  • Ratesetter lender account
  • ETF’s & LIC’s
  • Become a peer to peer lender on Ratesetter

The No Access Savings Plan: If you are worried that you might break your budget and access the funds in your savings account, you may want to consider contributing your savings directly to superannuation (as salary sacrifice via their employer). This is the ultimate way to build your nest egg, but remember you won’t be able to access the funds in super until you retire.

Wants (30%)
Consider these categories:

  1. Short term wants: eating out, entertainment, shopping etc
  2. Long term wants: holidays, new cars etc
Needs (50%)
Consider these categories:

  1. Household: rent / mortgage, utilities, insurance, maintenance
  2. Transport: public transport, fuel, registration, car servicing, insurance
  3. Personal: medical, health, personal care

Check Out My Budget Calculator:

Household Budget Rule

How Does Your Spending Compare?

Want to compare your spending habits with others across Australia?


Try peoplelikeu.com.au an awesome initiative from ubank.

Where: Keep Track of Your Spending

The good news is that you no longer need to track your spending using spreadsheets.

Here are some free and paid ways to keep track of your household budget.

Free Budget Trackers

Moneysmart Budget Planner

A solid budget planner and app from the Australian Government’s moneysmart website.


A mobile app that uses feeds directly from your bank to help prepare a live running budget for you.

”live each day as if it were your last but plan as if you are going to live forever”

Paid Budget Trackers


Track your budget, superannuation, property and other investments for a fee.


Track your budget, and your net worth, for a fee.


  • A personal budget helps you maintain discipline with your finances.
  • I recommend the 20/30/50 model of household budgeting.
  • Consider using a budget system to help keep you on track.
 The Wealth Guy Signature
The information on this blog and website is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision. We recommend you consult a licensed financial adviser in order to assist you with this.


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