Beginner’s Guide to Budgeting

Do you want to improve your money situation but don’t know how? Learning simple budgeting, and sticking to it, can be a lifesaver. Being in better control of your money can really help reduce stress and worry.

Step 1. Create goals

Are you saving for your first home? A trip overseas? Repaying debt? Or maybe you just want to have more money saved for an emergency to reduce your stress. Write down your goals, they will keep you focused when you’re tempted to spend.

Step 2. Review your spending

Look at your bank account transactions for the past three months, and start to sort them into categories. You might have categories like rent/mortgage, food, plus categories for essential and non-essential spending. Add up how much you’ve spent in each area.

Step 3. Decide what changes

Look at how much you’ve spent in each area and decide where to make cuts. Some things, like rent or your mortgage, will be essential and relatively fixed. Other essential items, like food, could be cut down. Other non-essentials things, like takeaways, could be areas you decide to reduce spending in.

  • Calculate debt repayments: If you have consumer debt - things like high interest credit cards or personal loans - make paying this off your main focus. Consumer debt really stops you getting ahead. Making the minimum repayments might be easy, but you really want to fast-track the repayments. Interest is wasted money, the rate (especially on credit cards) is way higher than you would typically make in an investment and you always have to pay it. For most of us, credit cards aren’t our friends!
  • Set your savings: Work out how much you can save every pay cycle. Being realistic is very important. One common pitfall is putting too much aside at the start of the pay cycle, then running out of money and having to dip into savings later. It’s better to start small and get into the habit of putting money aside and keeping it there.

Step 4. Create a new budget

Now you’ve sorted any debt, your savings, and where you can make the cuts, bring all the changes together. Create a new budget to fit within your income. This could be fortnightly or monthly, depending on when you get paid. Your first budget will be a guide, expect to tweak and adjust. There are many good templates online, or you could use a budgeting app. Once you’ve sorted your budget and are happy with it, review it every three months.

If you need help

  • Money Talks is the government’s free budgeting helpline. You can connect with a financial mentor for help, and it’s free and confidential. The helpline has seen increased demand since Covid-19, so don’t be afraid to call - you’re not alone.
  • The government’s Sorted website has great tools for budgeting, debt and saving.

Tips for budgeting success

  • Once you get paid, immediately put money towards debt and savings, plus living essentials. Then you can spend what’s left, according to your budget. Avoid getting into the trap of saving whatever is left at the end of the pay cycle - that rarely works!
  • Find a way to create and track your budget that works for you. Make it visual or fun, or use organised spreadsheets if you prefer.
  • Be realistic. Give yourself spending money and don’t be too tight. Keep in some things that make you happy.
  • Check in regularly with your spending, to see how you’re tracking to the budget timeframe.
  • Don’t be too hard on yourself. Be prepared to slip up from time to time with your spending, especially in the early days. For many, managing money is really challenging, so be proud of anything you achieve that improves your situation - no matter how small.
  • Think hard before you buy. Become a mindful consumer.
  • Budgeting doesn’t have to be boring or negative. Seeing your savings grow can make you feel good, and it can really help reduce stress.
  • Growing your income can help too. Upskill, push for pay rises, change jobs or industries, and negotiate salary hard in new contracts. More income means more going towards your KiwiSaver account too.

Some spending areas to review

Food: Most people find spending on food is one of the biggest categories in their budget. Reduce takeaways, start meal planning, and freeze leftovers. At the supermarket, take a list, buy only what you need, and swap to budget brands.

Insurances: Review your insurances regularly to make sure you’re covered for what you need and that you’re paying a fair price. Always check the terms and conditions before signing a new contract.

Utilities: Power, phone and internet tweaks can bring huge savings. Use comparison websites to make sure you’re getting a great deal. Review regularly as providers change deals often. As above, always read the fine print.

Work habits: If you’re working at home now you’re probably saving money on work lunches and coffees. Buying lunch and takeaway coffees adds up quickly over a few months. If you’re back at the office, swap to bringing leftovers then going for a walk at lunch instead. Buy your lunch once a week as a treat, or limit yourself to one coffee or less a day.

Your mortgage: Are you on the best rate? Could you be paying off more? See your mortgage broker or lender and review your mortgage regularly, because there may be better options that could save you thousands.

Information correct as at May 2020. Pie Funds Management Limited is the issuer and manager of the JUNO KiwiSaver Scheme. Click here for our Product Disclosure Statement. Any advice is given by Pie Funds Management Limited, and is general only. It relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees if you act on any advice. As manager of the Scheme we receive monthly fees that are determined by your balance and whether you are 13 years or over. We will benefit financially if you invest in our products. We manage any conflicts of interest via an internal compliance framework designed to ensure we meet our duties to you. For information about the advice we can provide, our duties and complaint process and how disputes can be resolved, visit All content is correct at time of publication date, unless otherwise indicated. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary. Please let us know if you would like a hard copy of this disclosure information.