A budget is a plan for how you are going to spend and save your money. It allows you to plan ahead to make sure that you will have enough money for the things you need and for the things that are important to you. Because budgeting allows you to plan ahead, it also helps you to worry less which can give you financial peace of mind.

Want to start budgeting? Use our free budgeting tool here (DOC and PDF) and follow our simple 9-step process:

In planning with money the first step is to be able to differentiate between needs and wants 

• When you need something, this means that you cannot live without it
• If you want something, you wish you could have it or you would like to have it
• For most people, the basic needs are similar

The truth is that needs and wants differ from person to person. It is not important that we share the same tastes or habits, but it is important that WE know what OUR wants and needs are.  Needs and wants can change as we grow older and or develop as individuals.

The important thing to remember is that your needs and wants will affect the amount of money you must have and how you use this money. 

No matter how much or how little money you earn, it is important to know how much money you have to spend, and what you will be spending it on.

Budgeting: 

• creates a picture of how you are spending your money
• is a discipline and skill of keeping track and planning
• is a management tool we use to assess spending behaviour
• enables you to build towards your financial goals by having a plan

• Always budget BEFORE you receive income
• Include all sources of income when budgeting (salary, grant, money from renting rooms, money from selling etc.)
• Budget for your needs first then wants
• Include Savings in your budget – Saving for emergencies & for goals
• If you need to adjust cut down on wants