Budgeting – it can sound intimidating, but it’s something you can master, and it could change your financial future for the better! We break down the how-to, so you can focus on putting this skill into practice. And we promise – the more you do it, the easier it gets!
Your step-by-step guide
Projected budget – do this at the beginning of every month (on or just after pay day)
- Get out a paper and pen, or use Excel on your computer. We love this free Excel budget spreadsheet template that you can download here.
- Create a box at the top and label it ‘Income’. In the columns and rows in this box, list all your forms of regular monthly income.
- Below your income box, create a header ‘Expenses’. Now make a list of all of your anticipated monthly expenses. Start with the guaranteed expenses: petrol, groceries, rent, insurance premiums – base these on what they normally cost you each month.’ Keep each expense to its own column or line, followed by the amount.
- Total up your expense amounts to understand your anticipated spend for the month. Excel will have formula to do this for you automatically.
- Compare this to your average monthly income. If it’s leaving you in the negative, you need to go back over your expense list and start cutting until they’re balanced by your income.
- Then – and here’s the trick – you need to apply this budget. If you had hoped to spend R500 on gifts but can’t afford it and have scaled back to R200, you need to stick to this.
Actual budget – do this at the end of every month (before pay day)
- Go back into your budget. Replace all of your estimated income and expense amounts with your actuals.
- Do this by either storing all your receipts and adding them to your budget manually, or by reconciling with your online bank statement.
- Ideally, your projected and actual budgets should look almost identical – this shows you estimated your spend correctly, and that you spent the same or less than you earnt. So you’re not overspending or going into debt.
- If your actual budget is very different to your projected, you need to reassess your expenses and cut back. Ideally, your expenses should always be less than your income.
Not staying on track? Check in weekly
Budgeting is only effective if you’re tracking your actual spend and adjusting your purchasing habits as needed. If monthly comparisons between your projected and actual budgets mean you’re still overspending, do this weekly to keep costs in check more frequently.
Make a set time each week, like a Sunday evening, to see where you’re at on your budget. If you need to, change anything in your behaviour for the weeks to come, before you’re in debt or out of pocket.
According to Sylvia Walker, an author and financial planner, your budget should become a part of all your financial decisions: ‘Your budget should be a part of your life, it normally doesn’t vary much unless there are unexpected expenses.’
There’s an App for that
For easy budgeting
Download Wally or 22seven, free apps that help you track spending, set savings goals and create a budget. Plus, functions like scanning your receipts takes a lot of the work out of tracking your spending weekly.
For debit order reminders
Apps like Bill Watch or Bills Monitor (free, with some in-app purchases) will notify you when monthly bills or debit orders are due, and help you organise your monthly financial to-dos.