Budgeting is the new spending. Here’s how to make it work

Young Australians have been using the pandemic to get on top of their savings, with 18 per cent of them starting to budget for the first time.

Afterpay’s Lockdown Liberation Study by McCrindle Research, which surveyed 1000 Aussies aged 18 to 24, reveals 82 per cent are more conscious of their finances since the outbreak and 52 per cent reached a savings goal during the pandemic.

Money by Afterpay executive vice president Lee

Hatton shares tips for first-time budgeters. Pay off your debt “It’s challenging to budget if you have debt, so aim to pay off your debt as soon as you can,” she says. “Factor any debt into the first few months of your budget so you’re committing to paying it off sooner.”

Don’t be too strict

Hatton recommends first-timers be firm on themselves “but not too strict” as it can be demotivating. “Start with a manageable budget as it may take a few months for you to get an accurate overview of your expenses and figure out what is a realistic budget and savings goal.”

Review your budget

Every three months, Hatton recommends checking if any bills have changed – are you using more electricity in winter, or has your gym membership cost increased? “You might decide you want to amend your budget because you’ve booked a weekend away that you’re saving for,” she says. “Remember to account for upcoming expenses – such as buy-now-pay-later payments – so you can factor them into your budget. Staying on top of your budget will mean you minimise the chance of any surprises.”

Make goals achievable

Hatton says saving a huge sum of money can seem daunting and unattainable. “To make savings goals manageable, create sub-accounts in your banking app, such as Money by Afterpay – launching soon – and name them what you’re saving for, (such as) holiday, new car, family Christmas presents,” she says. “Budget a set amount of money to put into each account weekly or monthly, whether that’s $20 or $100.”

Budget when shopping

Choose an amount and stick to it. “You may think $10 here or there won’t make a difference, but it adds up and you’ll find you’ve spent more than you can afford,” Hatton says.