SMART Budgeting

Written and accurate as at: 9 January 2017

Many people who make resolutions, unfortunately set themselves up to fail. This may be due to a combination of factors such as unrealistic expectations, ill-defined goals and objectives, poor time management, the wrong mindset or simply just getting distracted with life.

The SMART principle is a well-known method of guiding people in setting of objectives via an established set of criteria:

1. Specific – focus on a specific area that you would like to target for improvement


2. Measurable – devise a system of quantifying the progress towards your objective

3. Assignable – make sure you understand your role and the role of others involved

4. Realistic – implement an objective that can be attained, given available resources

5. Time-related – specify the time-frame in which you will reach your goal.

SMART Budget Planning

One of the first steps to building your personal wealth is understanding your household’s income and expenses. Completing a budget is a good way to see what are you currently earning, where you are spending your money, and how much you have left.

By assigning yourself and other household members the task of completing our Budget Planner Calculator you can begin to understand and take control of your total in-flows/out-flows and surplus as they exist today.

A common theme* among Australians as they progress through life is that their expenses increase. For example, on average per week:

  • A lone person aged under 35 has a household expenditure of $869
  • A couple aged under 35 has a household expenditure of $1,429
  • A couple with kids (eldest child under 5) has a household expenditure of $1,484
  • A couple with kids (eldest child between 5-14) has a household expenditure of $1,670
  • A couple with kids (eldest child between 14-24) has a household expenditure of $1,900.

In part, this can be due to increased ‘needs’ and the costs associated with raising a family, however, for some this also leads to a search and an accumulation of more ‘want’ costs over time for example, alcohol consumption and recreation.

With this in mind, review your budget, and assess what you are spending your money on in the areas of housing, fuel and power, food and drinks, clothing and footwear, medical and health expenses, alcohol, transport, and recreation.

You may find that some of your expenses are fixed, whereas others are variable or discretionary and the way you spend money will be influenced by your money personality and your lifestyle. 

If you do find that there are areas where you are ‘living in excess’ or places where adjustments can be made then think about how else you may use this rediscovered surplus.  

Consider the concept of paying yourself first in a realistic and time-related manner i.e. allocate portions of your income to reducing your levels of debt, saving for a holiday, establishing an emergency fund, and growing your investments for retirement before you go looking for that next ‘want’ purchase.

It may take time and some shifting of your priorities (needs/necessities versus wants/luxuries), however challenge yourself to create a plan in consultation with your professional finance team and take action towards the future financial situation that you would like to see – just remember not to be too frugal in your endeavours, make sure you cover your needs before wants, and still enjoy life’s journey.


*Australian Bureau of Statistics Household Expenditure Survey, 2009-10