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The Herald's Cooking the Books personal finance podcast is here to get you the tips you need to weather the financial storm. Hosted by Frances Cook, with a new expert on each episode.

There's only one good thing about those financial clouds on the horizon – we can see them coming, and many New Zealanders are heeding the warning.

It's Money Week, and so Sorted has released some research to show how we're handling our cash since Covid-19 changed… well… everything.

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Listen to the Cooking the Books podcast here:

As you might expect, it's a mixed bag. So let's start with the bad news.

Increased numbers of us are facing financial difficulties, with 31 per cent of New Zealanders needing to dip into their savings to pay for the basics.

Even worse, in the May-June period of this year, 24 per cent of those surveyed missed at least one bill or loan payment.

However, facing increased financial head winds seems to have created a desire to do better with our money. So here comes the good news.

More New Zealanders now have a savings account big enough to pay for one month of expenses, and are trying to save more each month.

Don't get too excited; fewer than one in three of us have the recommended three months of expenses salted away in a savings account. But it's still an improvement on our collective savings situation before Covid-19, and any improvement is good news.

Fewer of us are embarrassed about our money situation, and more of us are willing to talk about it, which is excellent. No matter what's happening in your wallet, shame never helps anyone.

So with more of us in financial difficulty, and many of us looking to save more even if those difficulties haven't hit yet, it's the perfect time to reassess the budget.

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I strongly believe that the ideal budget shouldn't make you feel restricted. It should be about prioritising what's important in your life, cutting out what isn't, and making sure you hit those long-term goals.

Here are some budgeting tips from the latest Cooking the Books podcast, to help you create a budget that doesn't get in the way of your life.

1. Set a goal

Your goal can be as big or as small as you like, but you need to start with why you're doing this.

Do you want to make sure you have enough money at the end of the week for brunch with friends? Do you want to make sure you're saving regularly, so that you feel less stressed?

Or do you want a save-to-spend account, where you build up enough to go on a nice holiday when the borders finally open up again? Or to hit a big life goal, like finally buying a house?

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What matters is picking a goal that excites you. That's what budgeting is all about.

Once you know what you're putting money aside for, it's easier to cut out the other spending that is getting in the way.

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2. Figure out what's coming in and going out

At its most basic, a budget checks what's coming in, what's going out, and whether you've got money left or you're going over. There are lots of easy ways to figure it out, and it's just about finding the one that works for you.

Pull up your bank account and write down all the regular bills. Then take note of how much you're paid each week.

If you're a detail person, feel free to get into excel or a budgeting app, and set down everything with its own category, and balance out the incoming versus outgoing money.

If you're not, no worries! Maybe group together expenses into bigger categories like core bills (housing, transport, food), the kids, savings money, and fun money. Then see which one is hitting your wallet the hardest.

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You can also try the Sorted Budgeting Tool if you want a free way to quickly see where you're at.

3. Let's get physical

If you're trying to reduce spending, seeing the money leaving your hands is a psychological trick that really works. This is why some people love the envelope or jar method.

Take your money out in cash once you're paid, and split it into envelopes or jars that are marked for what that money can be spent on. Once that money is gone – it's gone!

4. Budget for fun, so you don't snap

Budgets and having a fun life definitely mix.

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Start by prioritising anything you like to do that's either cheap, or free. Then think about the other things you like doing, and how you can include them in a budget-friendly way.

After that, include these things in your budget. You can't go cold turkey on life's joys just because you're cutting back, and you certainly don't need to.

Listen to the Cooking the Books podcast here:

• Listen to the full interview on the Cooking the Books podcast. You can find new episodes on Herald Premium, or subscribe on iHeartRadio, Apple podcasts app, or Spotify, or wherever you get your podcasts.

• If you have a question about this podcast, or question you'd like answered in the next one, come and talk to me about it. I'm on Facebook here, Instagram here and Twitter here.