Understanding your spending is key to your personal wealth

22 Feb 2022

Save more or spend less?

Each year in early May, the Treasurer delivers the Federal Budget and many people across Australia listen intently. The Budget tells us how the government plans to spend its revenue in the coming year, whether it can afford to give us tax cuts, and whether it expects to spend more (creating a deficit) or less (creating a surplus) than it receives.

Budgets are also important on a personal level, as you need to be spending less than you earn to start generating wealth.

Save more or spend less?

They might sound like the same thing. After all, saving is what we do with whatever’s leftover after spending, isn’t it?

Well, not quite. You see, it’s easy for spending to get out of control, and many people find it easier to focus on reducing their spending, before focusing on saving towards a goal.

Take control

To begin with, work out where your money goes. Start by keeping track of everything you spend and what you spend it on. There is a vast number of apps that can help you do this, but it can be just as effective using pen and paper or a simple spreadsheet.

Record your spending under categories based on necessity. Things like rent or mortgage repayments, utilities, and essential food go in the ‘needs’ group. The money you spend outside your needs are your ‘wants’. Some things you want will be ‘optional but important’, and others will fit into the ‘frivolous’ category.

Do I really need this?

After a few weeks, you’ll have an idea of where your money is going then it’s time to start asking yourself a couple of questions:

  1. Is this really where I want to spend this money?
  2. When I over-spend, what can I do to make better choices next time?


It’s worth remembering that every year in Australia we spend billions of dollars on food we don’t eat, clothes we never wear, and services we don’t use. So, for many people, gaining control overspending doesn’t mean ‘doing without’, it just means being prioritising to make better choices about how and where we spend our money.

Watch debt

Pay off credit cards every month to avoid high interest costs. If that’s not immediately possible, you may want to investigate consolidating credit card debt into your home loan or personal loans with lower rates. When borrowing, always make sure you leave a ‘comfort zone’ to ensure you can meet your commitments and any emergencies that arise.

Being aware of and then in control of how you spend your money is the first step to successfully managing money and paving the way to improved financial outcomes.

If you need assistance in preparing a personal budget that doesn’t force you to do without or give up everything you love, talk to us.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

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