How to Compile a Budget
STEP 1 : YOUR INCOME
Calculate the household’s total income. Add all salaries after deductions, and other income such as rent to obtain a total income that is available for spending.
Hint:
Transform your hobby or interest into an alternative source of income.
STEP 2 : FIXED PAYMENTS YOU MUST MAKE
Each month there are certain fixed payments that you need to make, i.e. rent/bond, car payments, insurance, school fees, loan payments & other accounts etc. Calculate this amount.
Hint:
Keep detailed monthly records of all expenses to assist you with your budget.
STEP 3 : VARIABLE PAYMENTS YOU MUST MAKE
Variable monthly payments also need to be made, but with the exception that you have some control in limiting expenses, i.e. groceries, transport, water/lights account, telephone, repairs, medical bill, bank charges etc. Calculate this amount.
Hint:
If these payments are not made, you stand to lose the items purchased or end up in court.
STEP 4 : DISCRETIONARY PAYMENTS
Discretionary payments can also be made monthly and are normally for luxury and unnecessary items like books, holidays, gifts, magazines/newspapers, pets & sports. Calculate your monthly discretionary payments.
Hint:
Implement procedures to control the use of these items and minimize these expenses in future.
STEP 5 : YOUR PERSONAL BUDGET
Use the budget table on the next two pages to indicate your income and planned expenditure – see if you have enough money to meet all the obligations.
Hint:
The easiest way to save money is not to buy unnecessary items at all.
EXAMPLE OF BUDGET TABLE
| Income Description | Self | Spouse | Total |
|---|---|---|---|
| Salary (After tax & deductions) | R | R | R |
| Commission | R | R | R |
| Over Time | R | R | R |
| Bonus | R | R | R |
| Investment income | R | R | R |
| Other (e.g. rent) | R | R | R |
| Total Monthly Income | R | ||
| Expense Description | Self | Spouse | Total |
|---|---|---|---|
| Housing | |||
| Bond repayments | R | R | R |
| Rent | R | R | R |
| Electricity | R | R | R |
| Rates and Taxes | R | R | R |
| Water | R | R | R |
| Insurance | R | R | R |
| Repairs/maintenance | R | R | R |
| Other | R | R | R |
| Transport | |||
| Fares (Bus/Taxi) | R | R | R |
| Car repayments | R | R | R |
| Car insurance | R | R | R |
| Car maintenance | R | R | R |
| Fuel Costs | R | R | R |
| Other | R | R | R |
| Medical | |||
| Medical Aid premiums | R | R | R |
| Medical and dental (not covered by medical aids) | R | R | R |
| Other | R | R | R |
| Family & household | |||
| Groceries | R | R | R |
| Telephone / Cellphone | R | R | R |
| Clothing | R | R | R |
| Child care | R | R | R |
| Education | R | R | R |
| Security | R | R | R |
| Household | R | R | R |
| Insurance | R | R | R |
| Domestic Help | R | R | R |
| Laundry / drycleaning | R | R | R |
| Pet Food / Vet | R | R | R |
| Other | R | R | R |
| Entertainment | |||
| TV License / DSTV | R | R | R |
| Entertainment | R | R | R |
| Sport / recreation | R | R | R |
| Hobbies | R | R | R |
| Restaurants | R | R | R |
| Gifts | R | R | R |
| Holidays | R | R | R |
| Other | R | R | R |
| Savings & Investments | |||
| Emergency Fund | R | R | R |
| Retirement annuity contributions | R | R | R |
| Unit trusts | R | R | R |
| Life policies | R | R | R |
| Endowments | R | R | R |
| Savings | R | R | R |
| Other | R | R | R |
| Other Costs (Accounts / HP ect) | R | R | R |
| Donations / Charity | R | R | R |
| Credit card payments | R | R | R |
| Income tax provision | R | R | R |
| Clothing Accounts | R | R | R |
| Bank Charges | R | R | R |
| Haircuts / manicures | R | R | R |
| Miscellaneous | R | R | R |
| Other debt payments | R | R | R |
| Other | R | R | R |
| Other | R | R | R |
| Other | R | R | R |
| Total Expenses | R | ||
| Nett Monthly Balance (income less expences) | R | ||