How to budget towards a bold future

A budget is a plan that helps you understand three important money matters:

1. SPENDING: What are your essential living expenses?
2. DEBT: How can you best and most reliably pay off any debt you have?
3. SAVINGS: How can you start saving money for financial goals both in the near and longer-term future?

Your budget plan should break down your spending and saving over the period of a month.

Six key steps to follow in order to put together your budget

1. Income
   Identify the amount of money that is coming into your household. This includes income from work, grants or any other sources.

2. Fixed living expenses
   Now make a list of essential living expenses that are mostly a set amount and paid once a month.
   
   These are costs that are completely necessary in your life. They usually have to be paid on a specific due date per month and are normally paid via debit order.
   
   This might include costs like rent, payments on cars or other goods, telephone bills, loan repayments and, of course, insurance!

3. General living expenses
   In addition, you now need to list all other necessary expenses that you have during the month but the amounts of which might change at times.
   
   This includes costs like food, toiletries, clothing, petrol or transport fares, household repairs and possible medical costs.
   
   You might hit a problem here – often when people do not control their spending, they soon no longer even know exactly on what they have spent their money; it just seems to have disappeared by the end of the month!
   
   If this has happened to you – it is time to break this spending pattern. If you are uncertain as to on what exactly you are spending your money, make an estimate. From now on though, it is very important for budgeting that you start keeping track by writing down every time you spend your money. You can even save all your till slips and then add them up weekly. This way you will be able to make your budget plan even more accurate in the future.

4. Doing the maths
   Add up all your various costs and subtract them from your income.

• Do you have enough money left over to start saving?
• Are you overspending and putting yourself in debt?
• Are there parts of your expenses where you could cut down?
  
  Particularly look if you can cut down on luxuries like entertainment, eating out or take-aways and unnecessary clothing and accessories.

5. Financial goals
   Now, also begin to think about and list what financial goals you want to accomplish – both soon, in the short term as well as further into the future, in the long term.
   
   Perhaps you would like to save up in the next few months to be able to go on a special holiday by the end of the year. Perhaps within five years, you would like to be able to afford to buy your own house.

6. Savings
   Your overall money goal should always be to have enough money, not only to pay any expenses or money owed – but also to put towards savings. Ideally you should be saving between 10 to 15 percent of your income. However, if this is not yet a possibility, whatever you are able to begin to put away is a good start!

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