Budgeting is a helpful instrument for tracking how much money is received and spent. It comprises income (from salary, grant, investment proceeds) and expenses (needs and wants). The favourable outcome is to have income exceeding expenses, known as a budget surplus. The opposite is called a budget deficit.
In the second episode, we dis- cussed earnings, including salary, grant or investment proceeds. In this section, we look at expenses: needs and wants. Needs are things you cannot survive without, like food, shelter, school fees and clothing. Wants are items that improve your quality of life; you can survive without them. Examples include holiday travelling, an expensive car, jewellery and beauty enhancers.
When drafting your budget, list your income amount and all your expenses (needs and wants) and allocate funds accordingly. My recommendation is to prioritise needs over wants first. Remember, needs are items you cannot survive without.
Lastly, it is important to draft a budget, irrespective of your income, so that you can measure and manage your monthly income and expenses.
In my opinion, one should try by all means to ensure that you maintain a surplus budget. Your income should be greater than your expenses. It is not easy and requires sacrifices, but they will benefit you in the long run.
– Sibusiso is a professional in the financial services sector in Carletonville.
