Slideshows | August 23, 2012

How to… make a basic budget

It’s one of the basics of managing money, but how to make a basic budget is still a mystery to many people.

Making a budget starts with working out how much money is coming in – and then how it is being spent. The results can expose some spending surprises. And learning how to master one can keep you in better financial health and out of the red. The important thing is building good financial habits by saving regularly and knowing where your money is going.
Watch the eZonomics video How much should I be saving? for more.




The first step towards managing your finances is to look at what’s coming in. Your monthly income can come from a range of sources including wages, earnings from investments as well as other benefits.


The fixed expenses

Add up “fixed expenses” over the year. This includes monthly bills of running a home as well as school fees, taxes and other annual expenses. Bank statements can help. Divide the total by 12 to get the monthly cost.


Identify the splurges

Variable expenses change over time and can be separated into “essentials” (such as food and clothing) and “non-essentials” (such as holidays). We have a lot of flexibility over both of these types of spending.


Track the variable

Because variable expenses change, tracking them can help. Methods include the traditional receipts in envelope approach or more modern online methods.


Make the choice

With your fixed and variable expenses listed, it’s now time to decide what changes can be made. Think about what’s important to you and your savings goals. Can you change to a cheaper energy supplier? Do you really need two cars?


Plan B

An important savings goal is building an emergency fund – also known as “rainy day money”. While less glamorous than saving for a new motorbike, it is a good rule of thumb to put aside up to six months of income to use in times of need. Once the goal is reached, set some more.


eZonomics team
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