Don’t Create a Budget, Create a Simple Personal Finance System

Creating a budget is essential if you want to take control of your life and achieve financial freedom and is simpler than most people think. It’s the perfect way to monitor your spending without completely eliminating any of your current lifestyle choices.

While it’s important to keep track of your expenses, don’t feel pressured to make drastic changes overnight.

The key is to approach your budget in a way that feels comfortable and sustainable for you. With a well-planned budget, you can effectively manage your money and achieve your financial goals.

A few small habits can leverage your finances significantly over the long term. All you need to do is create your own Personal Finance System.

How to Create a Personal Finance System

Time is money, so the saying goes.

Just like time, money can easily slip away if not actively monitored, potentially resulting in significant losses of 20-30% or more, although many do not admit it.

That’s why having a robust system in place is imperative for sound financial management.

Allow me to introduce you to the ACE rules for budgeting, a proven approach to taking control of your finances and driving business success.

Rule #1: Automate

The Simplicity of Automation

By adopting automation, managing your budget can become almost effortless – you simply create the system, and it guides you toward your financial goals continuously. With proper setup, your automations will alert you to any issues in your spending habits, allowing you to adjust accordingly. Over time, your habits will naturally adjust to fit your automated system, so bills get paid automatically, savings happens automatically, and spending decreases automatically. This means less time and effort spent on managing your finances, and more time to focus on other priorities.

What to automate:

  • Regular bills and loan repayments.
  • Direct debit internal transfers between your accounts, so that each account receives its money automatically.

To get started with automation, there are a few things to consider. First and foremost, it’s important to automate regular bills and loan repayments, as well as direct debit internal transfers between your accounts. This helps ensure that each account receives its funds automatically, reducing the chance of missed payments or overdrawn fees. But most importantly, you never have to think about it.

How to automate:

To ensure better financial management, we recommend that you transfer funds to your groceries and general recreation/spending accounts (see below) on a weekly basis. This practice will enable you to keep a closer track of your spending and prevent you from overspending during weekends. By transferring funds on a weekly basis, you can also ensure that your accounts are replenished regularly, enabling you to avoid cash flow issues.

When it comes to bills and loan repayments, we advise transferring funds to these accounts in the same frequency that you receive your income (weekly, fortnightly, or monthly). You can then set up automated transfers to pay bills and loans in the most appropriate frequency (monthly for some loans, fortnightly for some bills, etc.). By following this strategy, you can ensure timely payment of bills and loans and avoid late payment fees. This will also help you manage your cash flow more efficiently and avoid any unexpected financial surprises. And importantly, you don’t have to think about it after you’ve set up the transfers.

Rule #2: Categorise

Optimising your finances can be a challenging task, especially when you’re trying to juggle multiple expenses and financial goals. Creating separate bank accounts for your personal budget can make a significant difference. This strategy allows you to compartmentalise your funds and allocate them to specific expenses, making it easier to track your spending and stick to your budget.

Here are some reasons why this approach can be beneficial:

  1. Helps with budgeting: Separating your money into different accounts allows you to keep track of how much you have for different expenses, such as bills, groceries, and discretionary spending. This can help you stay within your budget and avoid overspending.
  2. Organises your finances: Having separate accounts can keep your finances organised and help you track your expenses more effectively. This can also make it easier to identify areas where you may need to make adjustments.
  3. Encourages saving: Setting up a separate savings account and automatically transferring a portion of your income to it each month can help you build your savings and achieve your financial goals more quickly.
  4. Reduces temptation: Keeping your discretionary spending money in a separate account can reduce the temptation to overspend or dip into funds meant for bills or savings.

Creating separate bank accounts for your personal budget may seem like a daunting task, but it can be a worthwhile investment in your financial future.

How to categorise:

When it comes to managing your finances, it’s important to have a clear understanding of your spending habits. One way to gain insight into your spending is to review your transactions from all bank accounts and categorise them. By creating categories such as groceries, eating out, hair, night out, take away food, and retail purchases, you can get a better idea of where your money is going.

From there, you can move each category into a “bank account category” and open separate accounts for each category.

This strategy can help you stay organised and focused on specific financial goals.

  1. Review: Start by reviewing your actual spending. Export all your transactions from all bank accounts and categorise them. For example, create categories such as groceries, eating out, hair, night out, take away food, and retail purchases.
  2. Create categories: Move each of these categories into a “bank account category,” as shown in the table below.
  3. Separate your funds: Open separate accounts for each bank account category, keeping it simple yet specific to each purpose.


Recommended Bank Accounts:

Bank Account 'label'How to use your account
Base CampIt's called Base Camp, because everything passes through here.

It is the central hub of your finances, where all income is deposited.

This account should not be used for external transactions or payments. Instead, it should be used to feed other accounts that you create for specific purposes, such as bills, groceries, and discretionary spending.

It is important to limit access to this account and ensure that cash is not withdrawn from any other source. One way to do this is by not allowing ATM card access to the Base Camp account.
Pocket MoneyTo better manage your daily spending, create a separate account specifically for expenses associated with your normal daily activities. This can include things like recreational activities, haircuts, takeout food, dining out, and fuel.

Be sure to exclude any expenses that could be allocated to household or grocery items.

Make this account your primary savings account on your ATM card for easy access, or get a separate Visa Debit.

This can help you track your spending and stay within a budget for daily expenses.

• Use cash for daily spending activities and withdraw it from this account.
• Set a weekly budget that is slightly less than your previous spending habits.
• Regularly transfer a weekly cashflow to this account to help reduce spending and promote awareness of expenses.
• The frequent replenishment of funds also creates a natural process of delaying unnecessary discretionary spending.
GroceriesFor regular groceries and items you take home (excludes alcohol, which comes from the Pocket Money account).

• Set a weekly budget that is slightly uncomfortable, but not overly restrictive, to encourage more affordable eating at home (eg. 10% less than previous spending habits).
• Adopt a simple rule: food bought and taken home comes from the Groceries account, while eating out expenses come from the Pocket Money account. This helps distinguish between necessary expenses and discretionary spending.
• Use a separate Visa Debit or ATM card solely for regular groceries and items you take home (excluding alcohol).
BillsInclude every bill you need to pay regularly. Such as monthly direct debits, loan repayments, insurances, Netflix, etc.

• Set up utilities to be auto direct debited every fortnight or month, which may lead to a slight overpayment that you can retain as a credit on your account.
• Calculate the total monthly amount required and ensure that every time you’re paid, you immediately credit the bills account with the required amount (plus an extra $50 per month, which builds a surplus to cover unexpected increases in utilities and other usage

This approach saves a lot of time and reduces stress associated with managing these items.
WhateverYour "whatever i want" takes away the restrictions and thoughts of 'going without' many associate with having a budget, and is for any discretionary purchases or expenses, such as recreation, shopping, hobbies, and online purchases.

It can also serve as a backup source of funds in case one of your other accounts is running low on cash.
SafeYour "safe" (savings) account is specifically designed for long-term savings and is not recommended for short-term goals such as holidays or purchases.

• Create a savings goal that’s meaningful to you, and feels good when you see it build up after several pay periods consecutively.
• If you have a specific additional purpose in mind, such as a holiday, it’s better to set up another account for that purpose.
• This account should not be linked to your ATM card, to avoid any temptation to use the money for other purposes.
OtherCreate further accounts for purposes that suit your lifestyle, such as “holiday” account, “children” account.

Rule #3: Embrace 10% less

To succeed in your financial goals, it’s important to adopt a mindset of discipline and create a budget – this monitoring usually results in reduction of your spending by at least 10%. At first, you may not be able to immediately adjust your spending habits to fit within the budget, but you can still be conscious of your bank account balances and manually transfer extra cash while shopping if you’ve gone over the limit (from your main account or whatever account – sometimes in early days you may even need to use your savings if you’re not used to saving that amount of money, but your habits should adjust within a few months). You could also challenge yourself to see if you can get through to the next “pay day” without needing extra cash by transferring next week’s entire spending budget a few days early and then make it last until the next pay day cycle.

It’s normal for budgets to be challenging at first, especially if you’ve set up automated transfers. However, with time and practice, you’ll develop better spending habits and learn to stick to your budget more consistently.

How to embrace:

It’s all in the mind to start with, a commitment for taking control of your money. Being the one in power of your future. If this is what you want, then embrace this mindset as the new you.

Develop a mantra “I’m the type of person that…….” and insert something that makes sense to you such as, “is good with my money”.

You are someone who manages your money. Get curious. Take control of your life.

Give yourself an expected spend limit for living expenses.  Be prepared to overspend some weeks or months.

Be prepared for slightly embarrassing dishonours at the ATM machine or when buying groceries – you’ll be able to quickly transfer from other accounts if you need to.

Don’t worry, It’s OK to break your budget:

It’s OK to break your budget as often as you want, I’m just advocating that you watch everything that happens in your bank account, every single transaction.

Every time you are about to make a purchase no matter how small, think about it, remind yourself this will be deducted from your budget.

How to create a budget:

  1. Calculate your net take home income (after tax and super)
  2. List all your debts and repayments
  3. List and verify your estimated living expenses (online bank account analysis will usually tell you the actual amount you spend versus what you think you spend).
  4. Create separate bank accounts for each expense category
  5. Ensure ATM card has only those accounts you want to access
  6. Get salary deposited to main account
  7. Set up automatic transfers to each bank account
  8. Automate bill payments
  9. Set a weekly reminder after pay day to review the previous period


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