How to draw up a Budget

Add structure and balance to your finances by creating a monthly budget that is aligned with your income and expenses. Without a well thought out and detailed budget in place, many consumers are left without the clarity of knowing where their money actually goes every month. Drawing up a budget is an effective way to gain control over your finances, while also ensuring that you prioritize the most important expenses first and don’t fall behind on payments.

A monthly budget also highlights areas of improvement in the way you manage your money, and can allow you the financial perspective you need to overcome your debt. Many times, a budget can reveal whether or not you are in over your head financially. If you find that your monthly expenses exceed your monthly income, our Debtco Group team offers a professional and effective Debt Counselling service nationwide. Our Debt Counselling service is fully accredited by the National Credit Regulator, and can be accepted by your various creditors.

Record your monthly salary and income

You can only fix a problem once you fully understand the extent of it. Before you start planning your monthly budget, evaluate your take-home salary (after tax) and list all forms of reliable monthly fixed income sources, adding them up to determine the final income amount you have to work with each month.

Outline your Fixed, Variable and Recreational expenses

List all of your fixed monthly expenses such as rent or mortgage payments, debt repayments, school fees and obligatory household and living expenses, which are essential. Then make a list of your variable monthly expenses, which are fluctuating expenses like groceries, petrol and electricity. Your budget should also include recreational and discretionary expenses, such as entertainment, hobbies and money spent on anything from take away coffees to shopping sprees.

Set Goals

In order to make the best out of your budget, set realistic short and long-term goals. These goals can include putting aside money each month towards an emergency fund for your family, cutting back on certain unnecessary expenses, as well as paying back existing debts in less time, by increasing your monthly instalments to creditors. At Debtco Group, our financial team are available to work with you on your budget and goals, by providing guidance and advice every step of the way.

Be Realistic and Flexible

While your budget should limit unnecessary spending and help you to save and pay off debts, you should also be able to enjoy life. There may be months where your expenses could be higher, which should be planned for in advance, so that you can stay on track. If you get a salary increase or take a knock in your income, you should adjust your budget accordingly.

Stick to your budget

Your budget should drive the financial decisions you make each month, while meeting the objectives you have outlined in order to achieve the goals you’ve set. While unforeseen costs do occur, you should be prepared to adjust your expenses accordingly, in order to make it through the remainder of the month without being overwhelmed by the costs you are facing. By sticking to your budget, you will also be able to put aside an emergency fund to cover any extra expenses, which could otherwise cause financial pressure.

At Debtco Group, we provide over-indebted South African consumers with a comprehensive Debt Counselling solution. For financial advice or a free assessment, contact us today.