5 Top Tips on Effective Budgeting

Managing Your Personal Finances Effectively Money is such a pivotal, crucial aspect

in our lives that the way we manage can affect how we live.

It’s therefore important that we manage it well and be on the look out for ways to improve how we manage our finances.

So, just as any sensible business would have a budget planner of some kind to monitor their financial income and expenses you might wish to consider using one to manage your own finances too.

Why having a budget helpsThere are many benefits to using a budget planner to help you manage your personal finances: You can see exactly how much

you are spending against how much you are earning and saving

You can see how much you are spending on household bills and paying off existing debts

You can allocate some funds for emergency, unforeseen expenses that tend to crop up when least expected.

Why having a budget helpsThere are many benefits to using a budget planner to help you manage your personal finances: You are less likely to end up in debt

because again, you would know how much money you have, what you can and can’t afford as well as what you can save.

Better still, as you are likely to end up saving more, you could reward yourself and your family with a treat, such as going on holiday, or getting something new that you can all enjoy and remind yourselves that you have this because you have been practicing sensible budgeting.

If you are less in debt, then you’re more likely to have a good credit score that could help you gain access to various lines of credit, such as a mortgage or a personal loan.

1To set up your budget planner, you might want to get hold of the following: A calculator A highlighter pen Your computer and excel

spreadsheetOR

Chart paper/flipchart/whiteboard Your statements

Get prepared!

2Create a column and list all your incomes in it, which could be in the form of: Salary payments Savings Investments Secondary incomes (e.g. rental

income, supplementary business incomes, etc.)

List your income/(s)

3Scan through the statements and highlight those items that reflect money being taken out from your account. These could be: utility bills, grocery and shopping bills credit repayments (e.g.

mortgage repayments, personal and payday loan repayments, credit card payments, etc.)

List your expenditures and assess the damage!

Total up all the expenses that are going out of your account – that’s the money that you are spending every month.

4It’s now all about having a look at which expenses you could do without and if you have any outstanding debts, how soon you can repay these in full. Here are some pointers to help you: Which of the expenses that you listed are

absolutely necessary? (E.g. Utilities, groceries, toiletries, commuting fares/ fuel costs, etc.)

What comes next? (E.g. mortgage or a personal loan repayment, or outstanding credit card balances, etc.)

Which of the expenses could you do without?

Prioritise, Prioritise, Prioritise!

5 Once you have allocated budget for such

necessary expenses, you are then left with what is known as ‘disposable income’ – i.e. the money that you are now left with.

It is up to you and your family what you choose to do with this money. Do you save it? Do you spend it all? Or do you do a bit of both?

It is up to you!

Make the most of your disposable income!

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