How to do a budget

PUBLISHED : Monday, 19 November, 2007, 12:00am
UPDATED : Monday, 19 November, 2007, 12:00am

A budget is like a map to help you navigate your way safely and avoid getting lost.

1 List all your expenses. You need to include everything.

2 For a week or a month, note down all that you spend, by category (food, clothes ...).

3 By looking at how much you spent, anticipate how much you plan to earn and spend for the coming months.

4 Don't forget the expenses that you don't pay monthly (insurance, holiday ...).

5 If your expenses exceed your income or if you don't save as much as you want, go through each category and see how you can reduce it. It's easier to prioritise and reduce some expenses on paper rather than when you're in a shop.

6 Follow your budget and check it regularly: it is your money instructions!

Quiz: true or false?

1. If you are late to pay a bill, you have to pay a late payment interest.

2. A budget is a summary of your past income and expenses.

3. Food expenses are a fixed expense.

4. Autopay is an authorisation given to your bank to automatically pay some of your bills with the money you have in your bank account.

5. Unexpected expenses are expenses you forgot to plan ahead.

6. Discretionary expenses are the easiest to reduce.

Here are a few activities you can research on this week's topic:

1 Ask your parents to have a look at your household bills and check how often they pay each type of bills (monthly, quarterly ...) and if the amount is fixed or variable.

2 Take the variable bills and write on a spreadsheet the amounts paid for a year: can you see any trend?

3 Come up with your own budget. Follow the steps described in this article. Then use your budget to anticipate your expenses and make sensible decisions.


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