How to Create a Budget
Budgeting may seem boring – but it is one of the most important financial tools we will ever have at our disposal. A personal budget is simply a snapshot of your income and your expenses. The key to managing your money well and not over-spending, is setting a budget and sticking to it.
If you know how to create a budget, and stick to it – you are on your way to becoming not only debt-free, but financially free.
There are a variety of budgeting tools and apps available on our cellphones these days. Every bank has a tracking app. You can add as many categories as you want – from food, to transport, entertainment etc.
Normally, you can set limits for every category, and put a an “overspend alert” on on your each category. When this alert goes off, alarm bells should start ringing and you will know to rein in your spending.
With all of this technology at our fingertips, there are some people who still prefer the “old school’ method of putting pen to paper and physically writing down their income and expenses.
The most important thing about how to create a budget is to honest when doing so. Being untruthful when it comes to your expenses is one of the quickest ways to see your budget flop! If you know that you spend R500 every month on take-away meals – then put that down. Minimizing that amount simply to make yourself feel better, is a sure recipe for disaster.
Track your expenses
Before you even draw up your budget – track how much you spend daily. Write down everything. Petrol / public transport costs, bread and milk from the spaza shop, the R5 you give your child to take to school, the packet of chips and tin of cooldrink you buy at work. Do this religiously for 2 weeks. You will be surprised by how much you actually spend on a daily basis. This will form a good guide on how to draw up your monthly budget.
Let NDA help you budget
In applying for debt review NDA will got through your budget with you, giving you sound advice on where to cut down and how to better managing your living expenses, your luxuries and your debt.
For more advice on how to create a budget, contact NDA today.