‘Budgeting’ a term feared by most people because they do not understand the implications of it and inevitably do it for the wrong reason. It sounds like a restrictive fun killing exercise but the inverse is true. It is a mechanism for building wealth. Money has to be managed, if you want to ensure it is prioritised properly and in line with one’s lifestyle goals plus wealth building.

If you can’t get your budget to work or last till pay day then you need to rethink your budgeting plan. A lot of South Africans think they budget but the reality is that most actually aren’t budgeting, they’re just really good planners. The truth is, is that budgeting is not just simply planning how to spend all your money so you can just get through month to month, it’s about setting goals and sitting down weekly to see if you’re on target to reach those goals. Budgeting is not just to see if you have enough money until the next pay cheque, but to make sure you have enough to put a certain amount away or to save up for something that you’ll be needing to buy in two months’ time. People often think that budgeting is what wealthy people do but in truth everyone can budget and save, it all just depends on your self-control and will to save.

Why is my budget not working?

The reason budgets don’t work is because people don’t work the budget. You need to sit down and make hard decisions about what you actually need to pay to live and what is an extra luxury that you simply can’t afford/don’t need in your life currently, and then you need to stick to that plan and follow it through weekly. Make sure you always keep tabs on your spending with the goal of not going over what you have set aside for the week – this and because saving and cutting back is never easy is why most people see budgeting as a tedious fun killing exercise – rather change your mind set and see it as a weekly challenge to get your financial dreams back on track and a reality.

Every week you budget successfully you add more money to the investment that is your financial future, whether it be for a holiday, unexpected medical bills or your car breaking down it will be that “investment” that will see you through. That’s why understanding the importance of budgeting is crucial and practicing is imperative in keeping you debt free.

What is budgeting actually all about?

People often think budgeting is simply your income minus your expenses and making sure the income outweighs the latter, this isn’t budgeting, it’s simply figuring out how much money you have left over to blow on things you don’t need. Budgeting involves paying yourself FIRST, in other words, putting money into your savings account every month – separate to your monthly cheque account – before you spend money on living. If you are sitting down weekly, going through your bills and making sure you’re on track as well as saving each month then you are budgeting effectively

This is going to take some getting used to but get in the habit of always make sure you prioritise your savings and most importantly put money away at the beginning of every month. The funds you have left in your bank account you then use for living and your expenses. This way you are still building your wealth and paying your bills effectively. While you getting used to this new habit most importantly do not get yourself into any more credit (card) debt. It will be tough at first, but once you actively start managing your money, you’ll see the success and feel the stresses slowly disappearing. Happy budgeting!

Written for www.truthaboutmoney.co.za a 1Life initiative.