Financial Literacy for Everyone
Savings

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How to budget

You draw up a budget by making a list of your sources of money (income) and all the money you spend (expenses).

The basic principles of a budget are:

  • Pay yourself first - save.
  • Make provision for all the expenses you know will happen.
  • Make provision for unexpected expenses that might happen.

Here is an example of a simple budget:

THATO'S BUDGET
ITEM
BUDGET AMOUNT
Allowance/Pocket money
Part-time job
R800
R400
Total income R1 200
Savings
Taxi
Lunch/food
Airtime for cellphone
Clothes
Movies and games
Pay back loan from friend
Unexpected expenses
R120
R200
R300
R100
R200
R100
R50
R50
Total expenses R1 120
Balance (Income minus expenses) R80

Thato should think about his budget before he spends his money. For instance, if he goes out one night and feels like having a "boerewors" roll, he should ask himself: "Do I still have money left in my budget to buy a roll?" If he has money left, he can buy the roll. If not, he should not buy the roll. Thato has R80 left in his budget (the balance), so he can buy the roll.

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