How to create a perfect financial plan - part 1. Budgeting

06 July 2020

While the government is finally taking real steps to help our young ones learn essential financial skills at schools (which is brilliant and should have happened years ago), it dawned on us that generations of kids before never managed to learn this critical stuff — in fact, a third of adults today aren’t up to scratch with their financial literacy. 

We’ve decided to head back to basics to help our readers with their foundational personal finance know-how. 

We will be publishing a series of articles this week which talk about the following:

  1. Budgeting - where does your money go and how should you be looking at it;
  2. Financial goals - how should you be splitting up your money.
  3. Risk and Investment - how to make the most of your investments while understanding the risks.



Fears of having to uplift your life and spend hours a day hunched over your bank statements mean many of us to avoid the idea of ‘budgeting’ entirely. At the end of the day, though, budgeting is just the scary word for the plan you create with your money to help you to your goals.

The first thing you need to do is know where you are sitting currently in the two categories of in-flows (money coming in) and out-flows (money going out). Print off your bank statements for the last three months. Dig out those receipts from your pockets. Look up the costs of any monthly contracts you might have on things like your insurance or phone. 

Once you’ve put all this information together, we are ready to set it out neatly into “Monthly Income” and “Monthly Spending”. Make sure you factor in every detail. Sometimes expenses such as petrol and entertainment can sneak up on you. 

According to Sorted some suggested categories for these lists can be as follows: 



Food and home maintenance


Car licensing and repairs

Benefits or government support


NZ Super payments

Fees and subscriptions

Rental income

Rent/Mortgage payments




Telephone (including mobile and internet)




Credit card payments






Personal expenses (e.g. entertainment) 


School costs



Once you’ve figured out your income and expenses, there is an all-important equation you need to run: 

Sum of income – Sum of expenses = money left over

Cutting costs:

Don’t be too hard with yourself if it’s not the number you were after. It is an opportunity to save some extra money.

  • Where can you afford to lose some pounds? Take a look at your budget with a fine-tooth comb and see if there are areas you can reduce spending. Cutting seemingly minor things can save you thousands over a year. 
  • Not all debt is made equal: It might also be a good idea to look at any debt you have and what needs to be paid first, starting with the highest interest rates. Prioritising paying off credit cards with higher interest rates first is beneficial in saving you some money. On the other hand, a student loan is interest-free (as long as you’re working in New Zealand) and can usually afford a more relaxed approach. Put them all on a list and pay the ones with the most priority, first.
  • Get that free money, honey. There may also be some government entitlements worth checking into such as childcare benefits and tax credits. 
  • Rethink your credit card I get it, you get some Airpoints and the occasional upgrade, but keep in mind most credit cards will have an interest rate of 10–20% per year. If you consistently owe $1,000 every month, that could cost you an extra $200 over the year. Banks love you getting into credit card debt.

Now that you have a more transparent system in place to look at your money, you can develop a plan. Setting a budget can be daunting as it might seem restrictive. Above all, keep your budget realistic and make sure you are still able to enjoy some of the things you find joy in. In creating some guidelines around your spending, you have a map to follow. Don’t fret too much if you overspend a little on one day. It’s the weekly and monthly amounts that are key to staying on track. Keep yourself accountable and stay positive so that you feel encouraged.


Bree, 28, Executive Assistant 

Bree is a young working professional who lives in Auckland. She earns $80,000 a year, which results in a take-home income of $59,168 (once she has contributed towards her KiwiSaver and paid her taxes/levies) and a monthly income of $4,551.40. She is an average kiwi who has several weekly expenses: 

Food and alcohol


Clothing and footwear


Housing and household utilities


Household contents and services








Recreation and culture




Other expenses


Total weekly expenses


Total monthly expenses

$733.10 x 4 = $2,932.40


Her monthly surplus is: 

$4,551.40 - $2,932.40= $1,619.00


The kōura difference

At kōura, we understand that keeping on top for your money will help you feel comfortable when heading towards retirement. When you know better, you do better (as Maya Angelou says). We’re here to help you better understand your financial goals and keep you on track so that you do better at retirement. Thinking about your budget is one of the first steps in maximising your KiwiSaver balance.

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