How to set up and stick to a budget

How to set up (and stick to) a budget

A man’s true wealth is the good he does in this world. – Bendixline

Why is a budget important?

Whether you are a single student living alone. Or a family of 4 living together. A budget is a very important tool to keep your finances on track and keep you and your family afloat. Sticking to a budget can be quite difficult and can be something that most people struggle to do. Some of the main reasons for struggling to stick to a budget is :

  1. Not setting up a realistic budget
  2. Not sticking to your budget

These two reasons mentioned above are the most common problems encountered when you have people who struggle to stay on budget.

The first reason: Not setting up a realistic budget. Is a pitfall for most people, especially if it’s your first time taking responsibility for your finances, and when your not 100% sure of all your expenses.

It is very easy to set up a budget; thinking that you’ll be able to stick to it 100%, but if you aren’t realistic with your finances coming in, versus your expenses. It can be just as easy to not stay on budget.

You have to take a real critical look at you monthly spending and make sure that when it comes to your budget you put down everything that you spend money on – even if you decide down the road that you want to cut that specific item from your spending still have it on your initial list so that you can see where your money is going.

Money should be mastered, not served. – Syrus, Maxims

The second reason is another BIG pitfall and probably the easiest one to fall into. Spending all your energy is setting up a good and realistic budget – AND THEN NOT STICKING TO IT. This happens all to often, and when you are in a situation where you need to stick to a budget, this can quickly eat into your finances and leave you wondering where your money went.

This happens to everyone – your in the shop grabbing some groceries. You haven’t had breakfast yet, so you decide to grab something small to eat… and that happens a few times every month. These small items slip through because they don’t look like big expenses. But when you calculate them at the end of a month you can see the damage that they can cause your budget.

So, how can you go about setting up a realistic budget?

Take a look at our instructions below:

Calculate all your expenses:

Some of your expenses will be a fixed amount monthly; such as your insurance payments, medical aid, and rent. These ones are easy enough to calculate. Other expense can be more flexible and random.

Others can be more random and spontaneous. To get a better estimate of these expenses divide all your slips for the last 6 – 12 months, divide them into suitable categories: car, medical, clothes, entertainment, etc. Then add all the slips together, and divide between the months you used (ie. if you used the slips of the last 6 months, divide by 6).

Calculate your Income

Determine exactly how much money you have coming in every month. This can be from your salary, your partners salary and any additional income you receive.

Determine if your budget will work for your family.

To do this you simply need to subtract your expenses from your income. If there is still money left after this then your budget will work for your family. This means you are making more money than you are spending – which is GREAT news. Now the money that is left can be used for savings and to pay off any debt.

What if your budget doesn’t work out for your family.

If you subtract your expenses from your income and you are left with a negative number – that’s not too good. This means that you are spending more than you are earning – and this is where you start building debt. To remedy this you need to take a stricter look at the budget you have set up. You need to evaluate where you can make necessary cuts in order to save money. You will need to make enough cuts so that there is between 10% – 20% of you income left after all of your expenses.

Hints and Tips for your budget, and sticking to it:

  • If you find it difficult to stick to your set up budget, make it a priority to track your spending. Keep a note on ever single item you spend on. Keeping track like this will make you consider your spending much more carefully. There are great programs for this available for your phone, my personal favorite free app is ‘Goodbudget: Budget and Finance‘.
  • Paying with cash instead of a credit or debit card can also help you to be more aware of how much your spending, because you have a bigger grasp of exactly how much cash your spending. Whereas when you use a card to make payments, often the amount your paying just gets ignored or swept aside.
  • Remember to make sure not to cut all the fun out of your budget. If your budget makes no allowances for fun, then it will be destined to fail.

The thing I should wish to obtain from money would be leisure with security. -Bertrand Russell

So, what are some of your budget creating tips? Or do you also struggle to set up a realistic budget? Let me know in a comment below.


Cuddle Fairy

5 thoughts on “How to set up (and stick to) a budget”

  1. Ah great advice here, I used to be really hopeless with money but now I’m just hopeless ha! I agree it’s good to keep some fun xx #candidcuddles

    1. I used to be hopeless with money as well! Until I was forced to be very strict with my budget. Great learning curve that I hope never to repeat. Ha ha.

  2. We haven’t had credit cards in I think 7 years or something and have taken out cash at the start of the week on the debit card as our subsistence for that week. Although it’s not safe to walk around with cash, by the same token it really is a brilliant way to keep an eye on your spending as that dreaded debit card curse can ruin your life! Thanks for joining us on #candidcuddles

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