Budgeting

Most people I meet don’t budget, they tend to spend whatever they have and when the money is finished, it’s finished. They are the type of person who, if your debit order is a day late it won’t be honoured and halfway though the month they are not sure why they have no money left. They have little or no savings and tend to purchase goods on impulse.

Not sure if you are one of these people? Answer the following questions:

1. Do you draw up a budget every month?
2. Do you discuss this budget with your partner whilst drawing it up?
3. Do you compare your actual expenses to your budget at the end of the month?
4. Are budget expenses equal your actual expenses?
5. Do you plan your purchases before making them?

If you answered NO to the above questions, you should be taking a look at your financial situation and start budgeting.

Don’t know where to start?
Here’s a good beginning:
Copy this budget layout

Now complete it (with your spouse if possible):
A few tips to make it easier:

• Your salary should be your gross salary, the amount you earn before deductions.
• Other income should include all other sources of income – eg rental, royalties, annuities etc.
• Short term insurance is insurance for your assets. Eg, car, household.
• Other policies will include payments made on investment policies, unit trusts etc
• Store card payments need to be calculated by adding all your store card instalments together.
• Credit card payments must be calculated by adding the minimum payment due for each card together.
• Entertainment includes all things entertaining. eg Going to a restaurant, movies or the theatre, Buying new Playstation or Xbox games, any money you plan on spending on keeping yourself entertained for the month. Remember this is the place you should be looking at cutting expenses first.
• Clothing should be cash bought clothing – you should not be buying clothing on credit. If you are – keep the payment in the store card figure, but plan to buy clothes with cash from now on. You thus need an amount to spend on clothing – give each member in your household a limit or amount for your budget, if you have no idea how to work out how much you spend, take last months total purchases on your clothing store cards – this is a good place to start, also remember it is a good place to cut if you are short of money.
• Hairdresser and beautician cost should be added for the month – another first to go item.
• Gifts – only if you have a birthday this month – after doing this for a while you will start to save every month for gifts and thus need a little every month as opposed to a lot sometimes. Birthday party costs should also be added here.
• Bread and Milk is another tricky cost – try this way “I go to the corner shop 3 times per week and spend an average of R 100, this means R 300 per week and R 1200.00 per month.”
• Add all your income – place it in “Total income” Add all your expenses – place it in “Total expenses”
  Amount left = Income – Expenses

A budget should be a plan around which you live rather than a rough idea of what you will be spending. This simple philosophy change can change your life. Try it, I dare you!

Draw up a new budget every month. Compare last months budget to this months budget. I recommend keeping these records for 6 months to compare them. The budget will highlight your strengths and weaknesses when it comes to money management. You can then address specific areas and train yourself to improve your weaknesses.