Sophie needs to create a budget that will show exactly what she earns, what she owes and what she spends. Themba outlines the five-step budgeting process.

STEP 1: LEARN WHAT YOU EARN

• Look at your pay slip and bank statements
• How much money is coming in each month?
• What is deducted from your salary?

STEP 2: KNOW WHAT YOU OWE – RECORD YOUR EXPENSES

• Write down all your expenses.
• What do you spend your money on currently?
• What do you owe?
• Work out your income minus your expenses?

STEP 3: REFLECT ON YOUR SPENDING

• Are you living beyond your means?
• What can you sacrifice or change?
• Are you saving enough?

STEP 4: DRAW UP YOUR BUDGET

• Use the template to create a household budget (pg.).
• What is your household’s disposable income?
• Plan your fixed, variable and irregular expenses
• What can you adjust to live within your means?

STEP 5: REVIEW YOUR BUDGET

• At the end of each month, compare your budgeted expenses to your actual expenses.
• Are you sticking to your budget?
• Is your budget realistic?
• What changes does your budget need?