Simple steps how to create a monthly budget with a downloadable template


Benjamin Franklin was onto something when he said, “Failing to plan is planning to fail”, and budgeting is no different. A successful financial plan can help to steer your life into a direction that you’ve only ever dreamed of.

Many people are afraid of budgeting for two reasons:

  1. They don’t want to be faced with the reality of their financial circumstance
  2. They think that budgeting is a complicated process.

For these reasons, we’ve compiled a list of simple steps to help you budget better, as well as a BONUS downloadable budget template.

1) Understand your income

When deciding to budget, people usually start by looking at their gross income, that is their total pay before taxes and other deductions. This is the first step that many people make, as it creates an inflation of your tangible income, which can cloud your understanding of money coming in and doesn’t give you a realistic depiction of what your finances actually look like. What to do instead: Your starting figure should be your net income (your total income after deductions).

For example, if you’re earning R 13 000 and your PAYE (pay-as-you-earn) comes to R1000, your UIF comes to R150 and your Skills Development Levy (SDL) comes to R100, then this is what your net income would be:
R150 (UIF) + R100 (SDL) = R250
R13 000 (gross income) – R250 (deductions) = R12 750
Therefore, your net income is R12 750

2) Monitor your spending

Print out a monthly bank statement of the previous month and use different coloured highlighters to categorise various expenses.

What to do instead: Use a red highlighter for fixed, expenses such as rent, utilities, vehicle finance, medical aid, etc. These are the bills that are of highest priority. Next, use an orange highlighter to categorise flexible expenditure, like petrol, groceries, airtime, etc. These are the bills that are necessary, but the amounts paid to each account varies from month to month and can be adjusted. Use a green highlighter for bills like entertainment and other miscellaneous costs incurred.

Click here to download an Excel Spreadsheet copy of our budget template to help you manage your money better.

3) Specify your money goals

Without a purpose, budgeting may seem unnecessary. People start budgeting either because they are over-indebted and want to work wiser with their money, or if they have a long-term plan, such as planning a dream holiday or making a big purchase, like buying a car. Your monthly budget is a way of taking baby steps towards getting you to that specific goal. These goals can be a simple idea, and may even cost a small fortune, but remember that every little bit will contribute to this idea in the long run.

What to do instead: Categorise your short-term goals from your long-term ones. This will help you to manage your budgeting process according to the needs of your goals.

4) Cut, cut, cut!

Use the spending habits of the past to guide you to make better decisions going forward. If you’re buying coffee every single morning, try cutting down to three cups a week instead. Be creative, the point is for you to still enjoy the things that you love, and not deprive yourself of the little pleasures completely, while trying to cut back on unnecessary expenditure and put that money towards your goals.

What to do instead: Look at the money spent on your needs versus that of your wants and adjust your habits where you can. Try the 50/30/20 budget rule where your income is divide – 50% going to your needs, 30% going to wants and 20% going to savings and debt repayments.

5) Revise

Budgeting is an ongoing process and just because you got it right this month, doesn’t mean that the same will happen next month. An unexpected expense might arise, and you might have to compromise your plan in a few ways and that’s okay. Budgeting is about planning and adjusting, while remaining cognisant of your goals.

If you are still struggling to keep up with your debt repayments, even after trying new ways to budget, complete our contact form and we will give you a call back for a FREE debt assessment.

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