Why budget?
“A budget is telling your money where to go instead of wondering where it went” Dave Ramsay
In other words, you are in control, which means you can start to afford to buy what you want rather than just wishing you could.
Benefits of budgeting
Avoid debt
When you know how much you can spend, you won’t need to borrow money or use credit cards too much.
Emergency ready
Life can surprise us with unexpected costs. Budgeting helps you save money for emergencies like medical bills or car repairs.
Feel confident
Knowing your money is planned gives you peace of mind and confidence in your financial decisions. Re-read the Dave Ramsey quote above
How to budget
Know your income
Write down all the money you get each month, including anything you get from selling stuff on MarketPlace, TradeMe or any other odd bits of money that come your wayList your expenses
Write down everything you spend money on. This includes rent, food, transport, power etc. Don’t forget the small things like coffee or snacks. And be honest and realistic – understating what you spend is cheating no-one but yourself!Separate needs and wants
Then re-read last month’s blog which was all about needs and wants. Needs are things you must pay for, like rent and food. Wants are things you like but don’t need, like eating out or buying new clothes. Again, be realistic and sensible. You are doing this so you can start buying things you want, so be sure you know what you need, not just want.Track your spending
Keep an eye on what you spend every day. You can use a notebook, an app, or a simple spreadsheet. But record everything. There are some good online resources available to make the recording simple.Do this for, say a month, then review what’s happened. Can you see things you didn’t really need to spend on? Have you spent money on things you didn’t expect to spend on? Have less income than you thought? Spent too much? Had to put off paying for things because you ran out of money.
Adjust your budget!
Tweak it so the issues identified above disappear. Rethink your needs and wants.
In summary
Budgeting isn’t about being strict or stopping yourself from enjoying life. It’s about making sure your money works for you, so you can enjoy today and be ready for tomorrow.
As always, we are here to help
