You don’t have to earn a lot of money to budget. Anyone can do it, whether you are getting money from friends, family, small jobs, social grants or a stable income, you can still budget.
Here are some tips on budgeting, so you can make it to payday without suffering!
What is Budgeting?
Budgeting means putting together a detailed plan of how much money you make (income) and how much you spend (expenses). This will help you in knowing your financial status, as you can work out how much you are left with after all the fixed monthly instalments are paid. Whatever is left over should be saved towards a goal.
What are the steps to making a Budget Spreadsheet?
It is important is that you are brutally honest with yourself when putting together a budget. Remember that the reason why you are doing the budget is because you want to improve your own financial situation. When you are ready to be truthful with yourself about your finances, the next steps are as follows:
- Know what you earn
- Know what you spend
- Categorise what you earn and what you spend (usually easier for earnings than for expenses). Example of categories are:
- Home Loan
- Kids school
- Restaurants & Movies
Tips and best practices to effectively maintain and update your budget.
- Develop discipline of reflecting and adjusting your budget and be as accurate and honest as possible. Remember that this is something you are doing for your own benefit.
- In order to keep your budget up-to-date and to enable historical tracking of your budget (i.e. comparing your budget from one month to the next), Experian has included a free budget tool here. This budget tool already has the key elements of a budget, so it is easy to populate it with your specific information.
- A budget should be setup at the beginning of the month and reviewed, updated throughout the month so that the information reflects your true situation. Remember, John Maxwell once said: “A budget is telling your money where to go, instead of wondering where it went." If you are keen to tell your money where to go, then accurate and disciplined budgeting is the key. Else you might just find yourself in a situation of wondering where your money went.
- Stick to it. Much like a diet, a budget only works if you stick to it. Sure, you can fall off the wagon every now and then but it is important to get back on it!