It goes without saying that having a budget is the basic foundation of good financial management. It is an excellent tool to have to maintain control over your finances.
In this article, we going to do a short example of what a very basic budget could possibly look like.
Every budget must have two sections, income earned and expenses incurred. Make sure to clearly identify the items that belong to each member in your family to ensure that the budget is properly managed and adhered to.
|Lights, water, rates etc|
|Levies (if within a complex/estate)|
|Vehicle monthly installment|
|Any interest payments in respect of overdue debt|
|Store Accounts (if you have any)|
|Day to day living and emergency|
|Entertainment (Netflix, DSTV, date night etc)|
|Cellphone and data|
|TOTAL INCOME||TOTAL EXPENSES|
This is just an example of what a budget could look like. Depending on your assets and portfolio, you could be getting many other sources of income as well. Interest on a savings account? Rent on a property? Make sure to include everything. The income column should at least be the same amount as your expense column in your budget. If this is not the case, you are spending too much and should cut down fast, or you are over indebted.
Some key tips
1- Be real!
Use the actual expenses you have spent and income that you have received (your bank statement can be quite useful here). Do not be optimistic and end up writing down a lower expense than you really expect to incur, (or a higher income than you expect to receive). Rather err on the side of prudence, and be pleasantly surprised, than vice versa.
2- Be disciplined.
Ensure that your actual expenses do not run beyond what you have budgeted for. That is when you will end up having to look for short term loans to stay afloat on a month to month basis. Ensure that you set a day at or near month-end where you compare what you actually spent vs your budget. Then adjust.
3- Plan for your day-to-day living expenses. Do not use your full income for the budget and not leave anything behind for day-to-day living.
4- Treat your savings like expenses. Better yet, if you can have an automatic debit/deduction from your account in respect of your savings, do that. This will force you and help you to save better. Save before spending.
5- If you have surplus money left over after taking care of all expenses; save, save, save! Use that surplus towards saving in efficient savings vehicles or paying off debt.