Budgeting better with the four walls of budgeting

by | Sep 6, 2022 | Personal Finance

Budgeting is by far one of the most important financial management tools, however with so many responsibilities and so little money, the exercise can also be very daunting. While the vast array of budgeting hacks and tricks may go a long way towards simplifying the process, it can sometimes be hard to navigate and fully service each and every one of your key household needs.

The key to any successful household budget is prioritizing well. This is because, before doing anything else with your money you need to at least cover the basics. It can be a bit tricky to figure out what these basic necessities are in order to adequately take care of our family. To better understand these, we can use what renowned financial expert David Ramsey calls the four walls of budgeting.

Food, shelter, transportation, and clothing functions which make up David Ramsey’s four walls of budgeting are by the most staple requirements for most households. Needless to say, food is a prerequisite for all living. Running out of food is a direct risk to your family’s life, this is why this item needs to be the top priority on any household budget. While food can be expensive there are still ways to ensure that your family has a sufficient supply without absolutely breaking the bank. While some homes spend over R3000, while others survive on R500. The important thing is to find grocery deals that work with your budget and not go beyond your means trying to mimic what you see other people spending on.

Next, every family needs a safe roof over their heads at any given time. Whether you’re renting or paying your bond, it is crucial to ensure that you cover your housing expenses before allocating money to anything else. Having your housing taken care of will also give you piece of mind in knowing that your family will not be forced out on the streets at any given moment because your home has been repossessed or you have been evicted from your rental home. Also, while you’re on housing expenses, don’t forget to sort out your utilities as well. Having shelter is good and well, but it can be impossible to enjoy that comfort is if your lights and water are off.

For most people, to be able to have an income and afford food and the roof over your head, they probably have to travel somewhere to get it. This is why the third wall of budgeting is transportation. Whether you run a business or are employed somewhere, very often you will have to transport yourself to that source of income throughout the month to be able to make your money. So, naturally then, every budget should include a sufficient amount for transportation. Calculate the amount required for either petrol or public transport fares to last you until the next income. The analogy is simple, if you don’t leave enough money for transport in your budget, you won’t be able to make any money to cover everything else in the next month, the risk is just not worth it.

The prioritisation of the fourth and final wall of budgeting, clothing, varies from household to household, and serves as a more flexible category of the budget rather than a fixed one like the former three. It’s probably not necessary to buy new clothes for a single person with little money. However, you’ll need to set aside a clothing budget for your family if you have kids. Every new parent will tell you what it’s like to have a young child who grows out of their clothes every week. And again, before school starts, you may need to buy your kids some clothing and footwear. Make sure you budget for this. Set aside an amount each month for clothing based on the amount that you think your family will need for new clothes for the entire year. In this way, you’ll be prepared for when the kids grow overnight or if school starts unexpectedly tomorrow. And if you have a tight budget, be frugal with your clothing purchases – or just be frugal in general.

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