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Friday, 21 October 2016 00:00

Where did my money go?

Welcome to the first blog edition of my 3 part Blog Series, 1-2-3 of Finance. Today we will talk about a budget. A budget is really a method by which you keep track of your money, and finding out where your money is going. Often people think that they don’t need to budget but if you look at any institution or business they all have a budget in place. Each University faculty has a budget and even the Government starts each new financial year with a budget.

A budget is basically just looking at your income and saying what you are going to spend your money on (expenses). So it is quite easy to come up with a monthly budget, the hard part is sticking to it.

So how do you start to draw up a budget? Well 1st you start with how much you are earning, so write it down as your income. If you earn any money from hobbies, part time jobs or receive income from property you can also write that down. Then add two more columns as in the picture below.

 
Name the 2nd column budget and then write actual in the following column next to it. Underneath that add expenditure, we have fixed expenditure and those are things you are going to pay every single month, for example, your rent, your car instalments, your cell phone, etc. We also have variable expenses, for example, school trip or buying a friend a birthday present.

In the budget amount, we are going to write how much we aim to spend. We are going to aim to only spend a set amount. For example, we only want to spend R1000.00 on food and we only want to spend R700 on petrol/transport. The budget amount is our goal amount.

Now comes the hard part, keeping track every time you send some money during the month. Luckily there are some great budgeting apps that you can download onto your phone that will assist in keeping track of expenditure. If you don’t have a phone you can purchase an A5 Notebook and every time you spend money you are going to note it down. At the end of the month, you are going to enter this into your actual column, how much you actually spent. Then you can see how far you were off budget. Maybe you spent an additional R200.00 on food because you stopped off at McDonalds a few times more than you planned and that caused you to go over budget.

Also check your bank account statement regularly to ensure that all debit orders are being deducted and that there are no unauthorised debit orders going off your account, make sure that the amount that is deducted is the agreed amount and take into consideration any annual instalment increases.

Part of budgeting is to take bank charges into account as well. Do you even know what your bank charges are? You might be surprised how much you are actually paying on bank charges.

At the end of the month add all these entries up. You can now see where you need to trim and where you can cut down a little bit. Adjust your budget when necessary.

Repeat the budget process in the following months again. Trim, track and trace. Now you will be more aware each time you spend your money you will find you probably won’t spend as much.Plus now you are working hard to spend only what you have budgeted at the end of the third month you will probably have a bit of extra money. Don’t forget to tune in next week where we discuss what to do with that extra money.

If you have any budgeting tips, favourite apps or a story how budgeting has helped you we would love to hear from you. Please drop a comment in the comments section below.

Author Ben Charlton

Edited by Natasja du Preez (Business Internet Marketing Solutions)

WARNING AND DISCLOSURE:

The content in this article is for general information purposes only and does not refer to specific advice to any particular person’s individual financial objectives or financial needs. Before making any financial decisions contact Ben Charlton or your Financial Planner. Although every effort has been made to verify the accuracy of the information contained in this material, we disclaim all liability, for any error, inaccuracy in, or omission of the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information alone and not speaking to a qualified Financial Planner.

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Ben Charlton

A financial planner can be someone who sees you as a number; they sell you the product that works best for them, they do exactly what you ask for, no more and no less. We are not like that, to us, our job is not to sell you a product, it’s to help you realise your dreams.

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