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Personal Budget Tips To Try In 2023

Nov 7, 2022 | Money

In 2021, Statistics South Africa published an inflation comparison, giving us a good eyeful of just how much more R100 would have bought you back in the 1960s and then again in the 1980s. Do you remember it? It was all about the Rand turning 60 and looking at what R1 could buy in 60 years ago.

To sum it up, things used to be a lot cheaper.

According to the research, the average cost of bread came to 9c in 1961 (for 1 kilogram of white bread, mind you), but it might not be all that fair to compare prices in the 1960s – a period that’s generally associated with low inflation. So let’s fast forward to 1980, when inflation was already starting to climb and you could pay 54c for a loaf of bread (weight unknown). More than 9c, sure, but still a mere pittance compared to the average price of R15,21 that we fork out for just 700g of the good stuff. 

It’s clear that things are never going to be as affordable as they were 60 odd years ago. With consumer prices increasing at what feels like a mile a minute, it may seem as though we’re constantly dealing with a constant case of too much month at the end of our money.

Instead of hankering after the cost of bread back in the day, it’s far better to be proactive and get yourself sorted with an updated personal budget. To that end, we’ll help you understand what a personal budget is, a few strategies you can employ, and how to use our personal budget calculator.

What is a personal budget?

A personal budget, also referred to as a household budget, is simply a way to plan and track your money on a monthly basis. Drawing up a budget allows you to see how much money is coming in compared to how much is going out. Having it all out there in the open allows you to make better decisions and improve your spending habits.

Essentially, a personal budget enables you to be intentional with the way you spend your money, while also giving you the ability to plan ahead or make room for an emergency expense.

5 popular types of personal budgets

You might be thinking that there’s only one way to set a personal budget, but there are in fact several approaches. You might find it best to keep things simple and straightforward, but then again, it’s far better to be informed about all your options.

Here are the 5 most popular types of personal budgets:

  1. Zero-Based Budgeting

Instead of using previous budgets, you start from scratch every time, using your current situation to decide which expenses should stay and which should go.

  1. The 50/30/20 Budget

This easy and realistic method relies on dividing your income into three spending categories, which is 50% for needs, 30% for wants, and 20% for savings or paying off your debts.

  1. The Reverse Budget

As the name implies, you reverse the usual order of things. Instead of prioritising bills and daily costs first and savings last, you prioritise savings over your bills and your day-to-days.

  1. The 60% Solution

Also referred to as the 60/40 method, this approach is great for the first timers because you only need to split your income into 60% which is allocated for your committed expenses (housing, transport, gym memberships, etc.). The remaining 40% is allocated to 10% increments, like 10% for retirement savings, 10% for short-term savings, etc.

  1. The Envelope Method

Old school and efficient. You simply split your money into different envelopes and use each one for its intended purpose. It’s really useful to curb excessive spending, reducing the likelihood of overspending – especially impulse buying.

How to use our monthly personal budget calculator

It’s important to know exactly how much you’ve got coming in and where your money is being spent. Knowing where every Rand and cent is being spent is a great first step towards starting your savings, getting out of debt, and preparing for retirement.

It’s not easy to figure these things out on your own, especially if you’ve never done it before, so please experiment with our Personal Budget Calculator.

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