HOW SHOULD WE BUDGET?

One of the hardest things to do when creating a household budget, is to try and see where the money is going. The first thing you need to do is record the expenditure and see if you are spending too much in one category or not enough in another.

A person with a lower income will have a higher percentage on basic needs than a person with more income, who may put more money into savings, recreation or charity. Living in a more expensive area,may make you spend more on housing, etc. Remember, these are only guidelines, you situation may call for numbers outside these percentages.

There is no ideal budget for the family as families spend money in different ways. This depends on the income and the phases in the lifecycle of a family. Different types of families may include: a)a young couple just married, b)a young family with young children, c)a family with financially independent children and d)a retired couple. Here are some proportions suggested for essential items of expenditure - these are not intended to be rigid and are therefore only guidelines:

Types of Expenditure

Housing (loan repayments, rent, insurance, maintenance) 25%

Food (30%), fuel (6%), general household expenses (9%) 45%

Clothing (depends on income as this can increase if income is high) 10%

Holidays and entertainment ( " ) 5%

Fares to work/fuel for cars 5% might have to increase cause of cost of fuel

Personal allowances (hairdresser, magazines, subscriptions, etc) 5%

Savings, insurances 5%

Budgeting is not easy especially when you have children. The expenses soar up high when they start going to school but even moreso when they start attending after school extra curricular activities. I would recommend that one does not overdo it on this issue as there are too many expenses involved her but moreso because it is not wise to be out every day of the week. It spells havoc in your organisation and household when you have to be out in our traffic-laden roads after 5pm.

Why should we budget?

1. It helps us control our spending
2. You can foresee and plan for any major expenses eg birthdays, Christmas, appliance which needs replacing, etc
3. It helps you prioritise
4. You can evaluate where you are spending too much
5. You can save money when you set aside some money

How to Budget

1. Consider the size of the family
2. Consider the size of the house
3. Consider the individual family needs
4. Consider the total income
5. Prioritise on the needs first and then the wants
6. Keep weekly and monthly records to evaluate
7. This can give rise to family collaboration and communication - one has to reach compromises
8. Adopt realistic but effective changes where necessary
9. Consider saving money

Why do people stop budgeting?

1. Due to lack of money
2. Becoming victims of materialism and overspending
3. Becoming accustomed to a regular cash flow
4. Can be in financial difficulty and become emotionally stressed
5. It can be too complicated
6. It can be time consuming