Easy Budgeting for Beginners: Guide for Young South Africans + Template

TL;DR

• A budget is a plan for your income and expenses, acting as a road map to achieve financial goals.
• Tracking income (e.g., salaries, allowances) and expenses (e.g., groceries, transport) helps control spending and identify habits.
• Writing down goals, like how you plan to use your money, could increase the likelihood of success by 33% according to a 2015 study.

Oftentimes we find ourselves thinking, "Where did all my money go?" One day we have lots of money and the next it seems like it has vanished into thin air. This usually happens when we don't keep track of our money; either with a budget template or budgeting app.

As someone only budgeted when I started uni, I know how tricky it is managing your finances as a student. Because I hadn't received more than R100 or so for pocket money in high school, it was a bit challenging managing more for grown-up essentials. It required discipline I learned along the way. 

Locally, more than 50% of South African university students rely on NSFAS. As such,  quite a number of us had to figure out how to budget around R1 500 per month (this excludes the cost of accommodation, which is obscene).

We need to know what we plan to do with our money in order to make the best use of it. This is where a budget comes in. I’ll break down what it is and share my simple budget template for South African students to help you stay on track.

What Is a Budget?

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A budget is basically a plan of your income and expenses for a specific period of time. Budgets act as a road-map – that you design – to help you stay on course and achieve your financial goals.

Plan

Having a plan (also known as "goal-setting") can improve the likelihood of achieving goals. According to a 2015 study by Gail Matthews, a psychologist, people who wrote down their goals were 33% more likely to achieve their goals than those who formulated outcomes in their head (Price-Mitchell 2018).

Writing down your budget, or typing it out on a sample Excel budget template, can help you achieve your financial goals. To do this, it's important to know what one's limitations are – what you can and cannot spend money on. But before we can expand on what we can spend money on, we have to look at what money is coming in.

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Income

Your income is the money coming in. It is the money you receive, usually on a regular basis. A few examples of income are:

• Salaries and wages

• Interest income

• Dividend income

• Allowances received from parents and/or a bursary/scholarship

Once you've identified how much money you'll be receiving, you can plan on how to spend it.

Expenses

Paying Rent Like GIFfrom Rent GIFs

Expenses are those things we spend money on. These can be regular or once-off expenses. This includes things such as:

• Groceries

• Cellphone contracts

• Water and electricity

• Transportation costs

• Entertainment expenses

Budget Time-Frame

A budget typically covers a certain period, such as a week, month, year, etc. Budgets can also be prepared quarterly (every three months or four times a year). You can decide what works best for you.

It may make sense for someone who receives a weekly wage to prepare a budget weekly, but someone who gets a monthly allowance will probably prepare a monthly budget. As you can see, personal budgets are usually prepared according to the frequency of income received and expenses paid.

Embrace the 50:30:20 Budgeting Rule

Navigating finances as a young South African can seem hectic. But the 50/30/20 Rule can help. Here’s a bit of a breakdown on the framework:

• 50% Needs: Things you can’t live without. Allocate half of your income to necessities like rent, groceries, and transport.

• 30% Wants: The nice-to-haves that enhance your lifestyle. Use the 30% split for non-essential travel (holidays), entertainment, and the latest smartphone.

• 20% Savings: Try to use the remaining 20% for saving towards an emergency fund, investing, and paying debt.

This is not an exhaustive list, but it gives you an indication of what to include. 

Honestly, I don’t always nail this split; I tend to allocate a fixed amount I think is reasonable towards savings (sometimes above 30%). I also spend less than 50% on my needs. But my spending on necessities is quite low, which accounts for the percentage. 

You can use the 50:30:20 budgeting rule as a starting point; it’s not law.  If you feel overwhelmed, you’re more than welcome to use my sample budget, which is great for young adults still figuring things out.

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When Is the Best Time to Draw Up a Budget?

The best time to draw up a budget is now. 

But really, you can draw up a budget at any time. The sooner you do it, the better. Because you'll have an estimate of where you are financially.  

I prefer drawing up (and revising!) my budget when I get my income and when I pay my bills. This is usually at month-end. I then see if I kept to my budget and make adjustments as necessary. Not everyone receives their income at month-end. Some receive them weekly, quarterly (four times a year), or even bi-annually (twice a year). 

At the same time, I also adjust my budget throughout the month. If I spend more in a certain area, I try to cut back in another. When I get a windfall, I try to use that to save or pay down consumer debt. Budgeting is an iterative process; something I do throughout the month.

You don’t have to budget the way I do. Find what works for you. We're all different, and our personal budgets will reflect that.

The Benefits of Drawing Up a Budget

There are a number of benefits to drawing up a budget. Below are some of them.

Goal-Setting