Five reasons your budget isn't working

5 reasons your budget isn't working

Using a budget is a prerequisite for avoiding debt and living within your means. But have you tried making a budget and found that it doesn’t work for you? Do you always manage to spend more than you budgeted for?

Instead of giving up, consider five common reasons your budget isn’t working.

1. You are budgeting without a goal

Much like dieting, budgeting without a goal tends to end in failure, according to Steve Crawford, owner of Experience Wealth and Victorian director of the Association of Financial Advisers: “Budgeting is essentially imposing a restriction on yourself on how you spend money. Whether it’s a small or big restriction, the brain is more likely to accept it if you are giving yourself something in return – the goal.”

The goal could be a new car, a holiday or saving a deposit for a house. Anything, really. Calculate how much you need to save each month to achieve your goal within the required timeline, and adjust your spending and saving to accomplish this goal.

2. You left items out

It’s easy to forget some of your expenses, particularly irregular items such as haircuts, birthday gifts or impulse buys. In this case, make sure you continue to adjust items on your budget until it is a realistic portrayal of all your income and expenses. If you are using a spreadsheet, insert notes to ensure you don’t forget the same things in future budgets.

3. You are not tracking the results

Have you diligently worked out a budget but are failing to track your actual spending? This is not unusual, Crawford says: “A lot of people set the budget but don’t track it – so how are you going to know if you’re on track to meet your goal?”

He recommends downloading one of the many budgeting apps available online. You simply input your daily expenses and the app does the rest, showing you whether you are sticking to the budget or coming perilously close to blowing it – if you are spending more than you should, you’ll know early enough to be able to rein in your spending.

4. Your banking habits make it difficult

Crawford recommends arranging your bank accounts to reflect your budgeting, with separate accounts for living expenses (rent or home loan, utilities and the like), another for lifestyle expenses and a third for savings.

“This way you can see what you have available in each bucket and spend only what you have,” he says. “And don’t spend lifestyle money out of the living expenses account.”

5. You are not accountable

Just as some people find it hard to commit to a fitness regime without a personal trainer who holds them accountable, perhaps you may need some extra motivation to stick to your budget. You can gain encouragement from a personal adviser, or a colleague or friend.

“If you are doing it all yourself, you are emotionally biased to spend,” Crawford says, whereas an “accountability buddy” can hold you back. Research backs this up – a study by the Dominican University of California found that people who write down their goals and share them with a friend are on average 33 percent more likely to accomplish their goals than those who simply set goals.

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Learn more about bank accounts

Can I open a bank account in another country?

Despite having a bad rap for facilitating tax evasion, it is possible and legal to open a bank account in another country, also known as an ‘offshore account’.

Some people choose to open a bank account in another country to invest overseas, for higher interest-earning potential or to access foreign banking services.

The process for opening an offshore bank account differs depending on the financial institution and country in which you’re opening the account.

Typically, you will need to provide identification such as a passport, a local bank statement and a signed declaration proving the source of the money being used to open your account. Usually, deposits into offshore accounts can be made by international money transfer.

Can I close my bank account over the phone?

In most cases, you can close a personal or business bank account over the phone. In fact, this is the best way to ensure you’ve closed an account properly.

By speaking to a banking representative, you can capture and close out any pending transactions, or interest owing/payable on the account being closed.

In the instance where the account is a joint account, or you have multiple bank accounts you want to close, your bank may send you a form that you need to fill out and return.

Either way, you would be advised over the phone of the steps you need to take. Calling your bank ahead of closing an account is often a smart course of action.

Can the government take your money from your bank account?

There are some instances when the government can take money from your bank account. This generally occurs in situations where you have an outstanding government debt.

Before it can take money from your bank account, the government authority owed money would first need to issue a garnishee notice. 

A garnishee notice is issued by the government agency (such as Centrelink or the ATO) to a third party that holds money for you or owes you money.

To take money from your bank account, your bank would be issued with the garnishee notice requiring it to pay ‘your money’ to the requesting agency to satisfy the debt.

Can British expats still open bank accounts?

As a British expat, you can open an Australian bank account, and you can apply for an account the same ways an Aussie would. You can even open an account online from the UK prior to relocating.

If you’re overseas, the bank you choose to open an account with may call you to provide you with our new account details beforehand. You can then have your ID verified within a branch once you’ve arrived.

And if you’re already living down under, the following list outlines the types of information required by most banks when opening an Australian bank account.

  • Australian residential address
  • Tax file number (TFN) or a TFN exemption
  • Identification (this can be your passport)

Can you open a bank account at 16?

Yes, you can open a bank account at 16, or even younger. If you’re 13 or under, you will probably need a parent to accompany you to a branch.

How do you change your account name on NAB banking?

Changing the name on your NAB bank account is straightforward, as long as you have the right documents.

If you’ve just got married, divorced or legally changed your name, here’s what you need:

  • Married – a marriage certificate
  • Divorced –your ‘decree nisi’
  • Legal name change –your legal name change certificate

You can take either the original document, or a certified copy, into a NAB branch, where it needs to be sighted by a bank employee and a copy taken.

Your NAB bank account name will be updated immediately. New debit, ATM and credit cards with your updated name will also need to be issued. These usually take between five to 10 working days to be posted out to you. Your existing cards will keep working until you activate your new ones.

If you haven’t legally changed your name, but just want to change your account nicknames, you can log onto NAB and do it through the Settings/Mailbox menu.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

How do you deposit change into your bank account?

One way to deposit change into your bank account is to visit a branch. Many lenders will also allow you to deposit your change through one of their ATMs.

Can a debt collector garnish my bank account?

A debt collector can garnish your bank account, but only with a court order. This drastic action is usually taken only if you’ve ignored several notices asking you to pay the debt.

If this happens, there is nothing you can do to stop it other than immediately pay back your what you owe in full or make arrangements to pay it off in installments.

Once a garnishee order is issued, your bank will put a freeze on your account as it processes the order. This usually takes two to three days and you won’t be able to access any of your money during this time.

If you have Centrelink payments, they may be protected, depending on what the court order says.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

How can I check my bank account balance online?

Checking your bank account balance online is a simple process. Once you’ve logged in to your online banking, clock on the relevant account and the balance should be visible.

How do you set up a bank account online?

Once you’ve compared bank accounts and found the right one, the process of opening a bank account online is quite simple and can be done in around 10 minutes.

To set up a bank account online, you’ll need to prove your identity and provide an approved form of ID as well as your tax file number (TFN).

If you’re a new customer of the bank, you’ll need to verify your identity and potentially upload documents before you can complete your online application.

Once your ID has been verified and you’ve set up your bank account online, you should receive your bank cards in the mail along with your PIN and any other account details.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
  • Update your direct debit details (such as loan repayments) with creditors
  • Export your payee address book (to keep a record of saved third-party bank account details)
  • Transfer the balance of your account (to the new bank account)
  • Close your account online, or by calling the bank or visiting a branch

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.