A beginner’s guide to personal budget

Struggling to keep your finances on track? A personal budget can help you understand where your money goes, checking for unnecessary expenditures, reducing debt and keeping your focus on your financial goals. Follow this simple guide to build your personal budget and keep it updated:

1 – Determine how much you spend

Gather all latest bills, bank statements and receipts. Categorise your spending into essentials and extras, on the essentials, put things like mortgage or rent, groceries, utility bills and on the extras put  all the others, gifts, new clothes, new furniture, eating out.

Add up those lists separately and you’ll have how much you spend on essentials and how much you spend on extras every month. Add the two to know your total monthly expenses.

2 – Determine how much you earn

Categorise this into fixed income and extra income. Put things like your salary, rental income and child support as fixed income and add money from the sale of item, cash gifts as extra income. The fixed income is the money you can count on every month.

3 – Stipulate savings and debt pay off targets

Subtract your total monthly expenses from your income, this is will determine if you have a budget shortfall or overage. If you have a shortfall, take a look at your Extras expenses to see where you can cut back.

If you have an overage, stipulate a monthly amount you’ll save and a monthly amount you’ll put towards paying debts, if you have any.

4 – Record expenses

To keep the budget going, keep recording all your expenses and keep in mind your savings and pay off targets. Recording will make you more aware of what you are spending and help you save even more money!

5 – Budget Spreadsheets, Apps and online tools

Keeping a budget and tracking expenses can be a lot easier with the help of online tools and apps. You can download our budget spreadsheet here, it is ready for you to fill in with your information and use to your benefit. You can also find a list of tested apps here.