Spending money on what is important to you

Are you managing your spending well?

If I mention the word “budget” to a client I can see the resistance immediately in their demeanour and they often disengage at the mere thought of a budget. Most people associate a budget with tightening the belt and sacrifice; this does not have to be the case at all!

A good budget is simply allocating funds to the things that are most important to you. Let’s face it, most of us spend at least a portion of our money on things that really don’t improve our life at all.

For this reason, I’ve stopped saying “budget”, and have instead referred to a spending plan, which I think is more accurate. Not surprisingly, if we plan how and what we are going to spend our money on, we are far more efficient.  In addition, our money will go a lot further to achieving our desired life style as well as our short, medium and long term goals.

The best way to start a spending plan is to identify all our essential expenses; these are things like housing costs, utilities, food, petrol and alike. These essential costs are in general non-negotiable and unavoidable; sometimes we might be able to be slightly more efficient with these by identifying cheaper providers or reducing consumption/wastage however, to a large extent, these are fixed costs.

The method we use to allocate our ongoing discretionary spending is our “Great Month Matrix”; we ask clients to identify all the things they like to do every day (we typically ask for 3-5 activities), we repeat this for things they like to do every week and then every month. Everyone has different priorities, but if we identify the things we like to do (daily, weekly and monthly) and actually do them as planned, we are leading a life that makes us happy!

Once we have identified our priorities, we cost each activity and calculate the funds we need to do the things we like.  This will also include monthly purchases that are important and may be things like purchasing a new item of clothing. Hopefully we will have enough income to meet both our essential and “Great Month” expenses. If not we identify the things we are prepared and most willing to reduce (or eliminate) from our great month.

We also need to allocate our spending to our short, medium and long term goals. We normally ask our clients to nominate 3 things they would like to achieve in the next year, 5 years and in the long term (10+ years). These may typically include things like overseas holidays, buying a house or private education for their children, but financial goals for different people are very wide ranging.

Once we have identified our long term goals we again estimate the costs and try and set firm timelines.  We then allocate the necessary funds to provide for the goals in the desired time-frame.

In an ideal world we would have sufficient funds to meet all these ongoing expenses and future goals, but for most of us the reality is that we will have to prioritise what is most important. This may involve making short term compromises, extending time frames or foregoing things on our list.


Developing a spending plan should not result in making sacrifices and reducing lifestyle, it should result in more efficient spending and provide clear direction on what is important to us now and in the future and directing funds to these things. Trade-offs between current and future spending are much easier to make if you are making conscious decisions based on priorities rather than blindly altering spending habits with no real goals.

Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services


  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State


  • University of Western Sydney
  • Penrith High


As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

Leave a comment

You are commenting as guest.