Keeping track of spending is important for at least 90 per cent of Kiwis, according to the latest Financial Knowledge and Behaviour Survey.
The survey, for which about 850 people nationwide were interviewed, found 91 per cent of adults believed a budget to be useful. Despite this, fewer than two-thirds said they actually bother to stick to one.
Executive director of the Financial Literacy and Retirement Income Commission, David Kneebone, says the findings show that Kiwis don't always follow their own financial advice.
"The survey shows there's a gap between what Kiwis know and how they behave - the two don't always go hand in hand."
Why budgets are essential"The aim of a budget is to make sure you do end up with some form of surplus at the end of each pay and ideally you're able to use that surplus to further whatever financial goals are right for you and your family," say Kneebone.
Sometimes, overspending is inevitable. But, "I know if I do it this week, the first thing to do is to pay off that debt as quickly as possible." People run into trouble when they regularly go overboard, he says.
The survey found that one in five participants spent more than they earned in the three months prior to their interview. Fifty-one per cent earned more than they spent, and 28 per cent broke even for the period.
Sticking to a budget will help keep these peaks and troughs in check, says Kneebone.
How to make the most of your savingsMany Kiwis struggle with long-term savings, the survey results indicate. While 62 per cent of participants appeared to be putting money aside for short-term goals, such as Christmas presents or New Year's holidays, less than a third were contributing money towards their mid- or long-term goals.
Despite this, our KiwiSaver scheme - which 59 per cent of the survey participants were involved in - seems to be boosting awareness around retirement saving.
Kneebone says retirement is the "ultimate long-term" savings goal. Balancing short- and mid-term goals, such as buying a new washing machine or planning for a first-home deposit, should be incorporated into a budget alongside this, he says.
How paying off debt quickly can save you thousandsRedirecting excess cash towards outstanding debt will save you incurring "dumb debt", says Kneebone. "If you put debt on your credit card and know what the interest-free period is... you have to pay off that debt within that period or you incur interest."
People often purchase things on sale, then leave them on their credit card for a year, he says.
Once the interest-free period expires (ordinarily between 45 and 55 days for credit cards), any discounts earned through a sale purchase are negligible.
Nearly 60 per cent of survey participants paid off their credit card monthly, the survey results showed.