Creating and sticking to a budget is a critical part of getting ahead financially. A budget allows you to create a cash surplus that you can use to repay your mortgage faster, save more superannuation, or pay for your children or grandchildren's education. Create healthy spending habits now and build wealth, reduce stress and feel in control of your financial future.

Budget Better in 5 Simple Steps
Step 1: Analyse your current cash flow

Understanding what you are spending and where, plays a key role in establishing a budget that works. It provides you with an overview of what your money is doing. Many people are well aware of what their income is but have only a rough idea of where they are spending their hard-earned cash.

Step 2: Set realistic goals

Establishing goals is what makes your budget unique to you. Determining what is important to you gives you a foundation to decide what you want to achieve with the money you have. One way to meet your savings goals is to separate needs from wants - save first and spend second. An analysis of your cash flow can show you where you are spending on things you don't really need including impulse purchases.

Step 3: Build your budget

Before you can build your budget, you need to ensure that your expenses are not more than your income. Expenses are everything that you spend your money on, living costs, debt repayments, deposits into savings accounts etc. If your expenses exceed your income, an analysis of your spending patterns will help. Or, if you have a surplus, you can decide where best to allocate that money. What goals do you want to achieve first?

Step 4: Implement your budget

Implement your plan and then ensure that it is based on realistic information. This can take a month or two of monitoring and tweaking, by month three or four you should be in good control of your budget with a sound understanding of cash flow. However, if it is not working, you will need to ensure that your income and expenses are accurate.

Step 5: Embrace your budget

Budgeting will allow you to get ahead and set you on the path to financial freedom. Remember, it's a guideline for your personal finances to help you achieve your financial goals. Give yourself permission to make changes, a budget shouldn't be ruled with an iron fist. Done correctly, budgeting can be quite freeing as it will reduce financial stress, provide stability for future planning, and provide you with control over your life.

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