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Personal budgeting pointers

In the current economy, personal budgeting is more important than ever. If you want financial security, then create a budget and stick to it to ensure you don’t spend what you don’t have.

Personal budgeting is a powerful tool for managing your money. Financial talk show host and writer Dave Ramsey said it best: “A budget is telling your money where to go instead of wondering where it went.” And while many may associate budgeting with restrictions and limitations, it can be quite the opposite.

Creating a personal budget can help you determine whether you have enough money to do the things you need to do – and the things you want to do.

Good personal budgeting can give you financial control, as well as financial freedom and flexibility, among many other advantages.

Two big bonuses of personal budgeting

1. Budgeting puts you in control

A good budget helps you prioritise your spending and stay on top of your monthly expenses: you decide how to use and save your money. Setting up a budget gives you a clear idea of what’s coming in and going out of your account. This can help you stay on top of your bills and monthly costs, plan to lower any current debt, as well as side-step any future debt, while also helping you to identify unnecessary expenses or any potential areas where you can save.

Download Personal Budgeting Template

Click here to download a personal budget template to keep track of your monthly finances.

Budgeting can help you to see the ‘big picture’, and whether you're spending more or less than what you can afford, and if there are any potential money challenges on the horizon; giving you full control of your money situation.

You don’t need to track every expense

The end goal of budgeting is to track your expenses, but you don’t need to account for every rand and cent. For example, keeping a record of your petrol bill could be enlightening, but if it doesn’t alter your spending behaviour then there’s no point in tracking the expense.

Where you could be overspending

The average person overindulges in three main categories, namely:

  • Dining out
  • Impulse purchases of fashion or gadgets
  • Entertainment

Once you’ve uncovered your spending habits, you can bring these areas under control, and keep a sharp eye on how much you spend per month in each of these categories. This is an easy strategy to implement and can have a significant impact on your finances.

2. Budgeting helps you keep to your financial goals

Your budget is a living document that will change according to your needs and wants. Keeping it accurate and up to date can help you monitor your monthly expenditure, achieve financial stability, and plan for any other future financial goals that may arise.

A budget can help you to save for a holiday, settle an outstanding debt, put together an emergency fund or see through the month without a negative balance. Having a budget, and knowing where you want to be financially, can keep you focused and motivated to stay on track.

Ultimately, creating a realistic budget, and sticking to it, enables you to put a solid financial plan in place now and for the future.

Using the 50/20/30 rule to divide up your income

Another strategy you may want to work towards is the 50/20/30 rule. This approach is simple and can have a big impact on your budget, and is a useful place to start if you are finding it challenging to allocate a total spend to the categories in your budget. In this rule, 50% of your income goes to necessities, 20% to long-term savings, and 30% to lifestyle choices.

Allocate 50% to necessities

Necessities include your monthly living expenses, such as:

  • Rent or bond payments
  • Water and electricity
  • Food
  • Transport costs
  • Cell phone bills,
  • Etc.
Allocate 20% to long-term savings

Long-term savings include the money you set aside for:

  • Emergency fund savings
  • Education investment funds
  • Long-term investments
  • Savings towards your retirement,
  • Etc.
Allocate 30% to lifestyle spending

This 30% allocation applies to anything that isn’t a basic necessity. The 30% allows you to both save monthly, and binge on the things you enjoy such as:

  • Entertainment
  • Restaurants
  • Upscale-clothing 
  • Gadgets
  • Furniture and home décor 
  • Kids’ toys and activities,
  • Etc.


Next step

Visit our Savings and Investments page for more information, or use the comments field to chat to customers and bank consultants in the money management tips section of the Community.