Like many others, you may be avoiding making a budget, despite realising this tool is the best way to take control of your finances and keep you on track to achieving your life goals. It pays off, however, to regularly review your budget with the help of a financial adviser so you can benefit from your hard work, grow your investments – and avoid any financial shocks.

Sarah Riegelhutch, author of Get Rich Slow, says too many people ignore budgets, or fail to follow them. “For a lot of people, being ‘on a budget’ has a negative connotation,” she says. And while it can be difficult, sticking to a budget has its rewards.

A budget for the ages

To bring rigour to your budget planning, decide why you want to boost your wealth. Setting a realistic goal – such as buying a house if you are in your thirties or forties, building your share portfolio and/or super balance as a pre-retiree, or funding travel or aged care needs in retirement – keeps you accountable and enhances your chances of success.

Armed with a goal, you then need to ensure that your budget accurately lists all your income, including your salary and any investment dividends or pensions, and truly reflects your spending habits. This is where it can get confronting. You need to outline all regular payments such as mortgage and rental costs, food, entertainment, phone and power bills, plus transport expenses. Check your bank and credit card statements, bills and receipts to get a clear picture of all your expenses.

The trick, according to Riegelhuth, is remembering irregular fees such as annual insurance premiums or quarterly water bills, while building in a buffer for unexpected costs such as property and car repairs. “You have to have a fudge factor,” she says.

Let your bank accounts manage your money

After splitting your income into key areas such as savings and fixed and discretionary spending, you should set up your bank accounts to manage your budget process and automate payments and savings where possible.

Riegelhuth says a simple, even obvious, way is to open a high-interest savings account, a ‘cash hub’, where you can regularly deposit all your income.

Then set up an automatic transfer of all the money you need for the week into a separate spending account. This will help you to stay within your budget. “It’s great because it simplifies things and automates everything,” Riegelhuth says.

Cut costs – and reap the rewards

A financial adviser can help you write and review your budget; it’s sticking to it that’s the difficult part. To help you continue to reduce your cost of living, think about measures such as doing home loan and credit card health checks at least once a year to ensure you are getting the best deal. Shop around for more cost-effective energy suppliers and phone plans. Apply for a credit card (with a low rate, of course) to pay for things that would be deductible at tax time, while also allowing you to direct debit and never forget to pay a bill on time. And consider using cash only for discretionary spending (it’s often easier to say no to a purchase if you have to physically hand over hard currency). Online budget planners such as Count’s budget calculator (mybudgetcounts.com.au) and ASIC’s www.moneysmart.gov.au can make it easier to determine what you’re spending your hard-earned money on.

Monitor and review your budget

As a rule of thumb, it is a good idea to redo your budget every 6 to 12 months to make sure it still reflects your current income and spending. If you get a promotion, for example, you should refresh your budget to factor in a pay hike.

Similarly, losing a job, buying homeware items or having a baby can change your financial settings.

Budgets can and should evolve as you mature. Pre-retirees may want to ramp up their superannuation contributions as they near the end of their career, while retirees typically like to spend more on travel. Your financial adviser can help you map out and review your financial plan.

How to cope when things go wrong

Don’t panic if your budget is under pressure, with outlays and debts suddenly seeming to be on the rise. If you have been reasonably disciplined for months or years, it should be relatively easy to recover. Ideally, in preparation for this scenario, Riegelhuth recommends setting aside three months’ worth of net income as a buffer in the event of an emergency.

If that is not an option to fall back on, you may be able to consolidate debt or refinance into a low-fee, low-interest product; set aside a weekly amount for discretionary spending to help limit impulse buys; and generally track your spending to restore financial discipline.

Boost your income

Of course, cutting costs is not the only way to respond to a crisis or balance the budget. Seeking a pay rise or selling some investments are viable ways to increase your cash-flow. If you have sufficient retirement savings, you may also be able to use a transition-to-retirement pension while you are working full-time to increase your income. Retirees may also consider annuities that can give them a regular, secure income.

Play it smart with financial products, too. For instance, many financially independent people have multiple term deposits – and staggering their maturity dates can provide a regular income stream during the year while at the same time optimising returns.

Again, speak to a financial adviser to identify investment options that seek additional sources of income that could either be used for day-to-day spending, or reinvested to further grow your nest egg.

Perhaps more than anything, the key to budgeting success is to stop procrastinating and put in place a long-term plan that can move with the times as you mature. Riegelhuth has no doubt that is can be life-changing. As she says: “It’s so empowering.”