How to create a budget to build your savings in 2022

With a new year and a new financially conscious you, it might be time to finally set up that budget you’ve been thinking about but never put into action so you can save up for something big in 2022.

A budget is helpful to keep you from spending outside your means and tracking where your money goes. It can help you cut down wasteful spending and let you find ways to put that extra money to good use - like hitting a savings goal.

Creating a budget in 2022

Making a budget doesn’t have to be complicated and there are plenty of different ways to do it. You can be old school and keep track of your expenses with pen and paper, or maybe you want to keep everything in a neat spreadsheet on your computer, or use a budget app on your phone.

Once you decide how you are going to keep track of your finances, the next step is to decide the time period you want your budget to cover. It’s usually best to base it on the frequency of your paycheck and also how often you pay your bills or loan repayments. Subtract those expenses from your income, whatever is left can go towards fun stuff or savings.

If you need a little help making your budget check out Mozo’s budget calculator. It can help you break down all your different expenses and it is easy to use!

Budget creation recap:

• Decide on your budget tracking method.
  
• Base your budget on how often you get paid.
  
• List and categorise your expenses (bills, loan repayments and the fun stuff)
  
• Pick a savings goal and when you want to complete it.

Do I need a savings goal for my budget?

You don’t have to, but having a savings goal is great, whether it be to save up for a trip to Japan, the newest iPhone or a home deposit. If you don’t have something big in mind, then an emergency savings fund could be good to have in your budget. You never know when you might need it. Either way, some form of savings goal is a smart move.

Many Aussies are indeed saving for something. A recent report by smartbank 86 400 says that 44% of Aussies are saving money to travel domestically and internationally. Meanwhile 47% of Gen Z and Millennials are saving up for a house deposit.

“By setting multiple saving targets, both short term wins and long term gains — people can set themselves up for success without having to live on a shoestring budget,” says Belinda Stewart, head of everyday banking at 86 400.

Choosing the right savings account

When saving and budgeting, you also want to make sure your money is going into the right type of account. If you let your savings sit in a standard everyday bank account you’ll probably be earning close to no interest, which isn’t ideal. Many banks offer saving accounts that help you earn money with bonus interest if you don't make withdrawals in the month.

You can check out the Mozo Expert Choice Awards Best Savings and Bank Accounts to find the best place to keep your money.

Saving a large sum of money might seem impossible, but a little goes a long way. Also try to reward yourself for hitting a saving milestone. If you are trying to save $100,000 for that deposit, consider treating yourself to a new house plant or a nice meal each time you hit $5,000 saved.

If you are looking for more ways to save, consider checking out Mozo’s saving account page or our family finance tips!