What is a budget?

Budget terms

The best way to make sure you spend carefully is to plan your spending and to know at all times exactly what you spend money on.

You plan your spending and saving by drawing up a budget, in which you write down exactly how much money you get in (income) and listing all the things you have to pay for (expenses).

However, sometimes we want things now, and do not want to save for it. A new cellphone now might make you happier than to save money. The problem is, if you do not plan carefully and save for your goals, you might have a new cellphone every year, but you might not have saved enough money for a deposit on a car in five years' time. If you borrow money now to buy something, the same thing will cost you more by the time you have paid it off. For example, if you buy a cellphone of R500 and pay it off, it could cost you R600 in the end, because of interest charges. If you buy it with money you have saved, it will only cost you R500.

A budget will help you plan:

A budget will help you to:

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