For many people the thought of drawing up a budget is scary. There isn’t enough money to cover everything; the family wants and needs and the sums can be intimidating.

Ignoring your budget might seem the easier option! But by sitting down with your family, you can work out what you need every month and how to manage your expenses so you don’t feel as pressured every month.

Before you even start thinking about your monthly budget you must look at how you decide what to spend your money on. Some expenses are ‘needs’ like rent, food and transport costs. While ‘wants’ are things we want but don’t need to survive, like a new cellphone. Think carefully about what you need to survive and what things are nice to have.

Once you have an idea of what your needs and wants are you can draw up a budget. Remember you must draw up your monthly budget before you receive any money, so you can plan accurately for how you will use your income.

A budget is a guideline that helps you calculate your income (money you receive) and your expenses (things you buy).

Don’t forget to list every source of income you receive. As an employee you probably receive a salary but other people in your family may receive other kinds of income like maintenance payments, social grants or even a stipend. List all of these sources of income so you know exactly how much money you are working with each month.

Your budget must include accurate amounts for all your expenses including your essentials like rent, transport and grocery costs as well as savings.

Once you’ve listed your income and expenses, work out if you have a positive or negative balance. To do this use this simple calculation:

Income – expenses = balance

A negative balance means your expenses are more than your income. If you have a negative balance ask yourself the following questions:
Where will I get the extra money from to cover my expenses?
Are there any expenses that I can cut down?

Remember you should draw up a budget every month. You should do this so that you can track your expenses against your budget, to see if you spent more or less than you planned, and then adjust in the future.

Finally you should always include some savings in your budget. It might seem impossible to save at first but by putting a little away every month you will be prepared for life’s emergencies.