In this article, Russell Dickerson, owner of RD Debt Counselling, discusses how to set up a budget.

I find setting up a budget really difficult, how can I make setting a budget easier for myself?

The success of sticking to a budget depends largely on how well you set-up your budget in the first place.

“Poor planning gives poor results.”

Budgeting is not easy.  Particularly when coupled with the very real possibility of life happening and forcing budget and planning adjustments.

READ MORE: How to stick to a budget

Who should be in charge of the budget in a family, and should the rest of the family be involved?

Every house needs a financial controller. Financial management by committee seldom works. You can make the decisions by committee, but do choose a financial controller.

Every member of the house should buy in to the process and see the benefits.  If part of your budget is to buy new sports goods for the kids, and you need to save over a few months, and they know about it; they will help with the savings and be committed.

What tips have you got about what exactly to do to set up a budget?

Choose a place to record everything. For the tech-savvy, this will probably be your phone.  For the rest a small Croxley notebook or something in between, tablet, reader, diary.  Choose something that you can carry with you easily.

You have to be honest, there’s no point in ignoring certain costs, no matter what they are, give them a code, and put them in.

For one whole month, payday to payday, the financial controller in the house needs to record every cost including the break-time chips and midday thirst quencher. The easiest place to start is with the month-end deductions. If needed, draw a bank statement.

Once you have all the costs add them to your computer or paper budget, a computer’s much easier because everything can be automatically calculated and easily changed.

You can split the costs into groups that fit together.  Keep the groceries and bread and milk and lunchboxes etc together, so that you can see how much it costs to feed the family for a month. Do the same with all the other costs, and add subgroups if necessary.

Now add the groups and subgroups.  You have your expenses for the month.

Now, normally at the top, you add your income and subtract your expenses.  If the result is negative, you have a problem, you are spending more than you get in, and you have to make some cuts.  If positive you have to decide what to do with the extra money, savings, investments, emergency fund, it’s your decision.

ALSO READ: UIF - who can claim for UIF and how much will you get out?

If you are not sure how to set up a budget and need some assistance, contact us today and let’s work out a budget plan suited for your needs.