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  • Writer's pictureVictoria Wallis-Smith

Do you wonder, “where does it all go?”

If you've ever wondered “Where does it all go?”, you’re not alone.

It’s as if our money has a life of its own – your paycheck hits the bank account, you have plans to (finally?) save, and then suddenly your money has disappeared!

What you do with your money is something only you can decide on, and control. But I can show you how to unravel the great mystery of where it goes – using benchmarks.

Like sand in your hands. Losing money. Spending money. Money coaching.

Setting benchmarks for your money is a handy tool to use when you start to construct a budget.

A benchmark is a point of reference against which things may be compared.

It’s taking a high-level view of your money to see where you need to do some work – and you do that by allocating your expenses to key categories.

Let’s look at some of the common categories you could use for a benchmark exercise.

Benchmark categories


This is the essential stuff – whatever that is for you.

You’d be including home loan/rent, petrol, utilities, insurance, phone, internet and food shopping (i.e. supermarket groceries not eating out or takeaway). But it might also include expenses that are values based like gym membership, or charitable donations.

Tip: A target might be to keep your everyday at around 60% of your household income.


This is your discretionary spending, and the simplest way to think of this is the expenses that don’t fit in one of your other categories.

Of course, it depends on your lifestyle and what’s important to you but typically we’re looking at expenses like eating out, alcohol, subscriptions and the takeaway coffee.

Tip: A target might be to keep your splurge at around 10% of your household income.

Short-term goals

What we spend our money on should be tied to our goals, and hopefully you’ve already identified your goals. But if it’s something you need to work on, read this Nutshell Money blog.

Short-term goals are great for your mindset – you have to wait a bit for the reward, but you’re seeing progress. That helps maintain motivation until you’re able to celebrate your success.

You might be planning a holiday next year – you’ve got 12 months to save for it. If you get paid fortnightly and it's going to cost $1,300 then that’s $50 each paycheck – a clear goal.

Tip: A target might be to allocate around 10% of your household income to short-term goals.

Long-term goals

Common long-term goals are paying off the home loan or building your retirement nest egg.

I’m not one to advocate scrimping and saving every penny – like any diet, and I’ve done a few, I don’t believe it’s a sustainable mindset! Life is for living. But I want to enjoy life today, tomorrow and the next day. So that means setting goals for this year, and longer-term ones for the future.

So if you’re trying to pay off your home loan in, say the next 10 years, you’ve got a really clear goal. But I wonder, are you actually making those extra repayments?

Tip: A target might be to allocate around 20% of your household income to longer-term goals.

How to use benchmarks

So, you’ve decided on your benchmark categories – the ones above are a good starting point. But just a note, you might want to break it down a bit more (sub-categories) … depending on the outcome of the exercise.

Step 1: Assign a benchmark % to each category.

  • What % of your household income do you think you should be spending on each category?

  • This benchmark % is your reference point against which you can compare your actual spend.

Step 2: Next, go through your bank statements over the last 6 months (or 12 months for a more accurate picture) and allocate every expense to one of your benchmark categories.

Step 3: Total your expenses in each category i.e., $X.

Step 4: Divide that total expense for each category ($X) by your household income ($Y), and multiply that answer by 100. If you’re looking at 6 months of expenses, be sure to use your income for the same period.

Step 5: You now have the % of your household income that has actually been spent on that benchmark category.

Step 6: For each category, compare the assigned benchmark % against the actual % spend.

  • What do you think?

Now you know where it went

The benchmark % you assign for each category is something only you can decide – but the key is to allocate your money to align with your goals.

Don’t let those streaming subscriptions creep, or a shopping trip get out of hand when you want to save for a holiday and pay extra off your home loan.

Are the savings goals looking good in theory, but a bit of a disaster in practice?

If the answer is yes, you’ve just worked out where it all goes – on the ‘splurge’ that maybe isn’t really that important to you.

Will you look back in a year and wonder why you don’t have the money for your holiday? Or is it time to create a cashflow plan – a budget – that’s not about sacrifice and restraint but about achieving your goals.

Need help with budgets & benchmarks?

If you’d like to know more about setting benchmarks that align with your goals, and creating a cashflow plan that’s sustainable, use the link below and let's have a chat.


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