Make budgeting the foundation of your finances

Having a healthy balance of income versus expenses requires whoever pulls the purse strings to be honest and realistic about what exactly their needs and wants are.

A solid approach to budgeting is the so-called ‘50, 30, 20 rule’:

• Needs or necessities should take up 50% of your income;
• Wants or discretionary spending must be limited to 30%; and
• Savings makes up the remaining 20%.

In fact, you should start with saving 20% immediately and then deal with your expenses that are absolutely necessary, and then only your discretionary spending.

This will allow you to maintain full control over your money and allow you to decide where your money goes. Budgeting means you set the boundary between your savings, prior to using any money on indulgences. This is another way to offset things such as ‘black tax’ and unexpected expenses and will allow you to really be transparent when detailing how far into your income you are able to reach in to cover family and other unplanned expenses.

Plan, plan, and lastly PLAN!

No harm can come from writing things down, so make sure your budget is. Separate certainties from the unnecessary and although it helps to be strict, don’t treat yourself like the money isn’t a token of your hard work and also leave room for flexibility.

Hear Mapalo Makhu give us more tips with Absa Money Wellness, every Monday from 5pm on #TheBestDrive.