5 Basic Steps - Learning to Budget
Correspondent | Monday March 21, 2016 15:22
Why Is Planning A Monthly Budget So Important?
It is important for us to manage our money, and learning to budget is one of those skills we can learn to do to manage our money properly. A budget allows us to take control of our money by:
- Planning our Future Spendings
- Recording our Current Spendings
- Reviewing our Past Spendings
The more time we spend working on our budgets the easier and more accurate they will become.
You will forget fewer things; you will always know where your money went to and soon will find your money going further.
You will have less money emergencies and more savings.
All you have to do is start following these five simple steps, and you too will be on your way to Financial Wellness!
Step 1: Get A Budget Planner Or Buy A Note Book
You must keep your budget plans in one place so that you can refer to your information all of the time.
It must be small enough to be carried with you, like a pocket size notebook. Don’t write on scraps of paper, you will not respect it and you will soon lose interest.
Step 2: Planning Your Budget
At the top of each page, in big letters, write: “Monthly Budget: P_________”.
(In this section each month you will write your salary).
Then draw three columns below, one called “Description”, one called “Budget” and the last one called “Actual”.
Write this months’ salary in the space at the top of the page.
Now in the Description column, record all of the bills and expenses you have to pay for every month.
Then think about the things you only have to pay for occasionally, or every three months or so, like school fees and friends’ birthday presents.
Every time you think of something else that you forgot, write it in.
Next, you must record to each of your items how much money you are going to budget for it. Once you have finished, add up the budget column. Is it more or less than your salary?
If it is less, you can put the balance into savings or paying off a debt more quickly, so add another item called savings or debt, and record the difference there.
Now this column should add up to your salary at the top of the page.
If your total was more than your salary, you will need to cut down on some of your expenses, otherwise you won’t make it to the end of the month with money.
Step 3: Recording Your Actual Income And Expenditure
During the month you must record all the money you spend, even if it is only 5thebe.
So in another part of your budget planner, have a record of your spendings, called an Income and Expenditure Sheet.
Draw three columns, one for Description, one for Spent Money (Expenditure) and one for Incoming Money (Income). By keeping this diary of your money you will always know exactly where your money goes to every month.
Step 4: Recording Your Expenditure Into Your Budget
At the end of the month, it is time to analyse your planned budget. The way to do this is to find each item you mentioned in your budget in your record of spendings.
Add up all the entries for this item and then record the total in your “Actual” Column in your budget. Do this for the all the items.
You will also see any items you may have forgotten in your current budget, which will help you plan a better budget next month.
Step 5: Plan Your Budget Every Month
Commit yourself to your Financial Health! Keep planning your budget every month, nobody else can do it for you. It will soon be easy and you will have money at the end of every month!
Author: Tshepiso Kgakatsi – Financial Wellness Trainer with S.C.I. Training (Pty) Ltd. © S.C.I. Training run BOTA accredited financial wellness programmes in Botswana. For help and information contact them on 3180111 or 72309718 or tshepiso@wellness.co.bw