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How to budget (and stick to it)

We look at the top tips and tricks on how to budget and stick to it

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Budgeting can help you pay off any debts you already have, stop you getting into debt in the future and enable you to save money in the long term. Not to mention make you feel calmer and happier about your finances. But how do you actually make a budget? And once you have one, how do you make sure you stay on track?

Let’s start at the very beginning

List the money going in and out

Your first step is to work out how much money goes in and out a month. If you’re living with a partner, then it’s ideal that you both do this.

If you have a regular salary, just look at your bank statement to see what you’re paid each month after tax has been taken off. If your income is more irregular, look at the last 2-6 months and total up all the money that came in during that time. Divide this by the number of months to get your average monthly income.

To work out your monthly spending, get hold of your bank statement and add up all your spending from the last 2-6 months. Remember to include credit card bills, direct debits and cash taken out at a cashpoint or at a supermarket. Divide the total amount by the number of months to get your average monthly spending.

Don’t worry if your monthly spending is more than your monthly income. And don’t worry if your spending seems like a lot. Budgeting is all about having a reality check and looking for ways you can balance your money again.

If you don’t want to use your bank statements, you can also use a budget planner tool if you find that easier.

Think about where you can cut back

Once you have listed money coming in and out, think about where you could cut back and save.

For example, if you are spending money on a morning take-away coffee, could you swap that for coffee from home in a flask?

If you’re paying for gym membership, could you exercise at home with online personal trainers instead? There are lots available online (such as Cassey Ho and BeFit).

Even little things like scratch cards can add up — one R5 LOTTO entry a week adds up to R260 a year.

If you need to make bigger cuts, think about whether you can reduce your rent, bond payments or your credit card interest. If you’re a tenant, you could move to a cheaper area, or see if your landlord will give you a discount if you renew your lease.

If you have a bond, check to see if your current rate is as competitive as new deals on the market today. You could save thousands by switching.

If you’re paying a lot of interest on your credit card bills, see if you’re eligible for a cheaper card. If you’ve been working on your credit score, you might be able to get a card with a lower interest rate.

Plan how much you’ll spend every month

Split your spending into categories such as food, bills, entertainment, gifts, travel and so on, and then plan how much you’ll spend in each category every month.

If you can, include a savings target based on how much you think you can save each month. Even if it’s R20, it’s better than nothing. Write your budget down in whatever format you like. You could use old fashioned pen and paper, or an Excel spreadsheet (there are set templates to get you started such as Personal Budget and Family Budget).

There are also lots of apps out there that can help you with your budget. Wallet, 22seven, GoodBudget, Stocard are just some of the apps made to help you keep track of your spending and budget. They are mostly free to download and easy to use.

Now that you’ve made your budget, let’s move into the second stage of trying to stick to it. It might be hard at first, but you’ll soon get into the swing of it and reap the benefits.

Note down all your spending

For at least for the first few months, you’ll need to note down everything you spend. This may sound pretty tiresome, but there are ways of making it easier.

The first option is to do this manually, by noting down each expense as you make it. You can use a spending diary, an Excel spreadsheet, notes on your phone, or manual budgeting apps. If you stick to this, it can make you really aware of your spending.

The second option is to use an app that links to your online bank account, such as 22seven. These apps do the work for you, sorting your transactions into different categories. These apps have time-saving benefits but may not always be completely accurate with their category allocation.

At the end of each month, compare your spending to your budget to see whether you stayed within your plan. It could be that you’ve overspent in one area, and underspent in another. Feel free to make changes to your budget to make it work for you.

Set up separate bank accounts – the ‘jam jar’ approach

Some people find it easier to split their money into different pots for different expenses. This is sometimes called the ‘jam-jar’ approach. For big spend areas, set up a separate bank account. For example:

  • Bills
  • Christmas/holidays
  • Rent/Bond payments
  • Emergency savings
  • Furniture/home improvements

Set up standing orders that automatically transfer your budgeted amount of money from your main account to your additional accounts. It’s best to use a savings account for these funds, but for household bills use a current account and then set up direct debits for each of your bills to be paid.

But make sure you remember to enjoy yourself and set up a ‘fun fund’ for the odd treat here and there.

Once you’ve got your budget sorted, you’ll know how much money you have to play with, and how much you can save. It might not be as fun as spending freely, but it’ll definitely be worth it to develop good habits and start saving towards your future.


Lucy has a wealth of personal finance knowledge, and is one of our in-house experts.