Planning with money & budgeting

Planning how to use your money

We have to make plans all the time. Maybe there is a taxi strike so you have to make an alternative plan to get to work or your in-laws are coming to stay so you have to make plans for their meals and where they will sleep.

But very often we neglect to plan how to use our money wisely. If you receive an income, whether that is through a salary, a social grant or a stipend, or a combination of these, then you should have a plan for how to spend it.

There are many ways to spend your money but with planning you can spend your money wisely to ensure:

  1. You cover all your basic needs, e.g. your rent
  2. You are saving for emergencies, e.g. an unexpected expense related to health care
  3. You are saving to making your goals a reality, e.g. saving for a deposit on a home you want to buy
  4. You are saving for your retirement, e.g. so that you can be financially independent

A financial plan is often called a budget and should include all your sources of income (that is any money you receive) as well as your expenses (the things you spend money on every month).

Putting together a budget can be intimidating but the best place to start is by thinking about what you need to survive and the things you want.

There are many ways to spend your money but with planning you can spend your money wisely to ensure:

  1. You cover all your basic needs, e.g. your rent
  2. You are saving for emergencies, e.g. an unexpected expense related to health care
  3. You are saving to making your goals a reality, e.g. saving for a deposit on a home you want to buy
  4. You are saving for your retirement, e.g. so that you can be financially independent

A financial plan is often called a budget and should include all your sources of income (that is any money you receive) as well as your expenses (the things you spend money on every month).

Putting together a budget can be intimidating but the best place to start is by thinking about what you need to survive and the things you want.

What is a need, what is a want?

There are so many things to spend money on and everyone will have a different idea about what they need and what they want. But generally the things we need are groceries, rent and transport money. These are the basic things we need to survive. The things we want are the ‘nice to haves’, these can range from new clothes, a new cellphone or a pay-TV subscription through to treats like sweets, chocolates, takeaways, cool drinks and holidays.

The most important thing is that you know what YOUR needs and wants are.

What is a need, what is a want?

There are so many things to spend money on and everyone will have a different idea about what they need and what they want. But generally the things we need are groceries, rent and transport money. These are the basic things we need to survive. The things we want are the ‘nice to haves’, these can range from new clothes, a new cellphone or a pay-TV subscription through to treats like sweets, chocolates, takeaways, cool drinks and holidays.

The most important thing is that you know what YOUR needs and wants are.

Budgeting

Now that you have a clear idea of what your wants and needs are, you are ready to tackle your budget. Ideally you should do a budget every month and it is useful to get the whole family involved so that everyone’s expectations can be real!

To start your budget you must know:

  • How much money you have to spend
  • What are your priorities for spending?
  • Recording how much you spend on each item

By thinking about your wants and needs you can also identify where you could cut down your spending so that you can save more money for the things you really need in life.

Budgeting

Now that you have a clear idea of what your wants and needs are, you are ready to tackle your budget. Ideally you should do a budget every month and it is useful to get the whole family involved so that everyone’s expectations can be real!

To start your budget you must know:

  • How much money you have to spend
  • What are your priorities for spending?
  • Recording how much you spend on each item

By thinking about your wants and needs you can also identify where you could cut down your spending so that you can save more money for the things you really need in life.

Prepare for the unexpected

Life is full of unexpected events, maybe the fridge breaks, your child loses their new soccer boots or a family member passes away and you are now expected to contribute to the funeral. By planning how you will use your money you can prepare for these unexpected events and use your savings for these emergencies. This gives you more control over your finances and allows you to manage when something unexpected happens.

Complete your budget in 5 easy steps

Now that you have thought about your needs and wants and how to prioritise saving, you can start working on your budget. Use our budget template (PDF or Excel) to record your income, expenses and work out if you have any money left over at the end of the month.

  1. Income: record all your sources of income (remember to record what you expected and what you actually got) and calculate your total income
  2. Needs: record all you needs (remember to track how much you expect to pay and what you actually pay)
  3. Wants: record all your wants (remember to record that you expect to pay and what you actually pay)
  4. Expenses: calculate your total expenses
  5. Balance: subtract your expenses from your income to determine how much you have left at the end of the month

Complete your budget in 5 easy steps

Now that you have thought about your needs and wants and how to prioritise saving, you can start working on your budget. Use our budget template (PDF or Excel) to record your income, expenses and work out if you have any money left over at the end of the month.

  1. Income: record all your sources of income (remember to record what you expected and what you actually got) and calculate your total income
  2. Needs: record all you needs (remember to track how much you expect to pay and what you actually pay)
  3. Wants: record all your wants (remember to record that you expect to pay and what you actually pay)
  4. Expenses: calculate your total expenses
  5. Balance: subtract your expenses from your income to determine how much you have left at the end of the month
Doing your budget every month might seem like a big chore but a critical component of this process is budgeting and tracking our expenses against our budget, to see if we spent more or less than we planned, and then making adjustments in the future.
#GetWageWise tip: list savings as an expense (in the needs column) at the beginning of every month to develop the habit of saving.
Saver Waya Waya WageWise is a financial literacy initiative of the ASISA Foundation. The WageWise website was largely funded by the Sanlam Foundation.