A budget is a plan that helps you get a picture of how much money you receive every month and where it is spent. It’s a way for people to work out how much money they are getting in from their various income sources and plan how they are going to spend it responsibly.
Budgeting is a fundamental skill in money management. If people are not aware of the importance of a budget or do not track their income and expenses, then it is unlikely they will be able to manage their money in other ways.
Planning with money allows us to have some control over our finances and allows us to meet some unexpected financial expenses.
Money that you receive on a regular basis, income can be from various sources including…
Money that you receive on a regular basis, income can be from various sources including salary or wages, social government grant, stipend, allowance (from family or friends), child maintenance, income from a business (e.g. money received from selling, money received from renting out a house/rooms to people, money received from doing a certain service e.g. baking, sewing, looking after children, etc).
It is important to factor in all your sources of income when budgeting. Within households, it is important that the budget is discussed by all involved.
Essential items necessary for us to survive such as food and shelter and our needs…
Essential items necessary for us to survive such as food and shelter and our needs and wants as individuals differ.
Over time, we may find that our needs and wants change, depending on our life stage.
It is important to keep some money for emergencies that may come up during the month.
It is important to keep some money for emergencies that may come up during the month.
These are items you spend money on each month. Many people worry about going over…
These are items you spend money on each month.
Many people worry about going over budget, when in fact they should focus on keeping within their budget. To budget effectively, one must record their expenditure against their budget, on a regular basis.
Expenses may include fixed and variable expenses:
- Fixed expenses: expenses that happen regularly and remain unchanged over a certain period. E.g. rent, bond, school fees, insurance payments etc.
- Variable or changing expenses: These are expenses that you make every month, however, they vary and change depending on your usage, e.g. airtime/data, electricity, water, pay -TV subscriptions, and groceries. When we are required to adjust and cut down on certain expenses, it is usually easier to cut down on variable expenses.
Nice to have things that you may want to buy if there is money left. These are not…
Nice to have things that you may want to buy if there is money left. These are not essential but luxuries that we can survive without. These may include takeaways and entertainment.
A budget is a living document that you need to consult throughout the month and not…
A budget is a living document that you need to consult throughout the month and not something you draw up once a month and forget about. You need to track all your expenses, whether small or big. Small expenses can add up and have a big impact on your spending. For example, if you are spending R50 on lunch at work each day, at the end of the week you have spent R250 in 30 days (month) you would have spent R1 500.
So, once you have drawn up your budget, the next thing is to track how much money you are using.
- This can be done by keeping notes or receipts of all the things you spend money on.
- Once a week, calculate your spending and compare it to your budget to see whether
(i) you are spending according to your budget,
(ii) will you still have enough to last you till the end of the month and
(iii) whether you need to cut down on some expenses you had planned to ensure you have enough money to last you until the end of the month.
- This constant comparison of the plan and the actual money spent is important to see whether you are on track and to help you quickly adjust if you are getting off track.
Money that you receive on a regular basis, income can be from various sources including salary or wages, social government grant, stipend, allowance (from family or friends), child maintenance, income from a business (e.g. money received from selling, money received from renting out a house/rooms to people, money received from doing a certain service e.g. baking, sewing, looking after children, etc).
It is important to factor in all your sources of income when budgeting. Within households, it is important that the budget is discussed by all involved.
Essential items necessary for us to survive such as food and shelter and our needs and wants as individuals differ.
Over time, we may find that our needs and wants change, depending on our life stage.
It is important to keep some money for emergencies that may come up during the month.
These are items you spend money on each month.
Many people worry about going over budget, when in fact they should focus on keeping within their budget. To budget effectively, one must record their expenditure against their budget, on a regular basis.
Expenses may include fixed and variable expenses:
- Fixed expenses: expenses that happen regularly and remain unchanged over a certain period. E.g. rent, bond, school fees, insurance payments etc.
- Variable or changing expenses: These are expenses that you make every month, however, they vary and change depending on your usage, e.g. airtime/data, electricity, water, pay -TV subscriptions, and groceries. When we are required to adjust and cut down on certain expenses, it is usually easier to cut down on variable expenses.
Nice to have things that you may want to buy if there is money left. These are not essential but luxuries that we can survive without. These may include takeaways and entertainment.
A budget is a living document that you need to consult throughout the month and not something you draw up once a month and forget about. You need to track all your expenses, whether small or big. Small expenses can add up and have a big impact on your spending. For example, if you are spending R50 on lunch at work each day, at the end of the week you have spent R250 in 30 days (month) you would have spent R1 500.
So, once you have drawn up your budget, the next thing is to track how much money you are using.
- This can be done by keeping notes or receipts of all the things you spend money on.
- Once a week, calculate your spending and compare it to your budget to see whether
(i) you are spending according to your budget,
(ii) will you still have enough to last you till the end of the month and
(iii) whether you need to cut down on some expenses you had planned to ensure you have enough money to last you until the end of the month.
- This constant comparison of the plan and the actual money spent is important to see whether you are on track and to help you quickly adjust if you are getting off track.
You can use a budgeting template such as an excel template, click here for an example. You can budget using paper and pen, you can use your bank’s budgeting tools and expense trackers.
But it is important to write it down and not just budget in your mind. Seeing the numbers written down helps you to see the real picture and think through the expenses carefully.