Budgeting is important (unless you’re one of the really fortunate people who is getting so much that you don’t need to worry about expenses). Without a budget, how do you know whether your salary is going to last until the end of the month? Can you afford to treat yourself to something special this month – maybe a new CD or a nice evening out? What about the unforeseen expenses – car repairs, appliances breaking down, medical bills? Are you saving enough for your retirement, or your childrens’ education?

If you’re reading this in the hope that we have some miraculous application that’s going to do all your budgeting for you, you’re going to be disappointed. We haven’t yet come across any budgeting method that doesn’t take time and discipline. However, if you haven’t worked with a budget before, be assured that it will be a worthwhile exercise.

Just because we’ve said that we don’t have a miracle solution doesn’t mean that you have to be overwhelmed at the thought of putting a budget together. It doesn’t take a degree in Accountancy, and the process is actually quite simple.

• Your starting point is your income. Work with your nett income (not gross), and try to work only with the amount that you’re confident you’ll get every month (so maybe exclude bonuses, insurance payouts and lottery wins!). For people who are married or living together, it’s preferable to combine your incomes and work with one nett amount.
• Secondly, make a list of your expenses. For this, you may find the downloadable spreadsheet on our website useful (https://creditbalancingservices.co.za/services/). If you can, make provision for a “contingency” fund every month, to provide for those unforeseen expenses (appliances breaking down, roofs leaking, etc.). Also, don’t forget about expenses which may not occur every month, but which also need to be provided for (e.g. car licence, servicing, tyres). Ideally your monthly expenses should not exceed your nett income. If they do, you need to review those expenses and reduce some of them.
• Thirdly and finally comes what is probably the hardest part of budgeting : making sure that you’re not exceeding your budgeted expenses. The reason this is so hard is that it means keeping track of everything you’re spending. Each person will have to choose a system that works for them. Those who are sufficiently computer-literate may choose to create a spreadsheet and track their spending that way (be warned that this may mean keeping the slip from every transaction, or making a note of every amount spent so that it can be entered into the spreadsheet later). There are cellphone apps for tracking spending (again, don’t under-estimate the discipline needed to record each transaction). We’ve even advised clients to draw their cash when they get paid, divide it into envelopes (an envelope for each budget “category” e.g. rent, transport, electricity, groceries, etc.), and use the money in each envelope ONLY for its budgeted purpose (although please consider the obvious danger of having large sums of cash standing around).

It’s often said that nothing good comes easily, and sticking to a budget is no exception. If you can do it, though, it can truly change your life for the better.