Basic Budgeting

Budget Bother

Or The Economic Oracle

Budgeting is boring. It inevitably means trawling through receipts and records, and there is always a better way to spend an evening than that.

Unforetunately, budgets are also peculiarly practical.

They are an invaluable aid to long-term planning (knowing what you've got, and what you've not).
They are an indispensible aid to your awareness of the consequences of short-term decisions.

Working out your budget

  1. Work out (or even better track) what you spent when last year.
  2. Interpret and update it for next year.
    The table you end up with a table should look something like this:
  3. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
    Clothing & Grooming                          
    Personal                          
    Professional                          
    Donations                          
    Food                          
    Groceries                          
    Work Canteen                          
    Eating Out                          
    Gifts                          
    Health                          
    Insurance                          
    Fees                          
    Medications                          
    Personal Insurance                          
    Liability                          
    Legal                          
    Accident                          
    Recreation                          
    Cinema & Theatre                          
    Hobbies                          
    Holiday:Accomodation                          
    Holiday:General                          
    Holiday:Transport                          
    Music                          
    Partying                          
    Reading                          
    Sport                          
    Television & Video                          
    Saving                          
    Deposits                          
    Investment                          
    Life Insurance                          
    Shelter                          
    Rent/Repayments                          
    Repair & Maintenance                          
    Electricity                          
    Heating                          
    Water                          
    Insurance                          
    Furniture & Fittings                          
    Transport                          
    Fuel                          
    Insurance                          
    Repair and Maintenance                          
    Tax                          
    Public Transport                          
    Various                          
    Communication: Telephone                          
    Communication: Internet                          
    Subscriptions & Memberships                          
    Loan Repayments                          
    Other                          
    Expenditure                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
  4. Next you need to work out how much money you will be getting in the course of the next year.
    If you are salaried, this is usually easy enough to predict (and more depressing).
    You should end up with something that looks like this:
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
    Gifts Received                          
    Money                          
    Dividends                          
    Interest                          
    (Bank Charges & Tax)                          
    Work                          
    Wages/Salary                          
    (Deductions: Income Tax)                          
    (Deductions: Social Insurance)                          
    (Deductions: Other)                          
    Income                          
    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
  5. Now, by subtracting the totals for expenditure from the totals for income, you can look at what is left over.
  6. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
    Balance                          
    • If your "left-overs" are positive, then you are laughing.
      Go back to your expenditure and see if you can allocate it sensibly.
    • If your "left-overs" are negative, then you are not in such a happy position. Go back to your expenditure and see which corners you can cut with minimal impact to your quality of living.

After you have done a budget that is as close to the truth as you will allow yourself, you can also use it to try out various scenarios to see what effect they might have.