Three words people: budget, budget, budget.

The modern idea of "entitlement" has led many of us a merry dance. Just because you think you deserve a new pair of shoes every week or a new car every two years, doesn't mean you can afford it. It's simple really; if you spend more than you earn you'll get stuck in the quagmire of debt and despair.

Drawing up a simple budget might not sound very sexy, but it need only take half an hour or so, and you can give yourself a Noddy-badge afterwards. So grab a pen and a sheet of paper or open up an Excel spreadsheet and here we go...

Step 1:
Draw up two columns. In the first column, write down your set monthly expenses – rent/ mortgage, water and electricity, phone and cell phone bills, children's allowances, medical aid, retirement annuity, ballet classes, gym membership, household insurance, car payments, petrol, armed response etc. (You’re welcome to plagiarise my list, but don't forget to add your own stuff.)

Step 2:
Now write a realistic estimate of other monthly expenses such as groceries, take out, entertainment, restaurants, clothes, cosmetics, toiletries, books, CD's...

Step 3:
Then write down a guestamite for unforeseen expenditures such as school concerts, burst pipes, hair emergencies etc.

Don't forget to add in birthdays every month.

Step 4:
In the second column, write down your income. Add your partner's salary if you share expenses.

Step 5:
Now, add up the amount in the first column and compare it with the amount in the second column.

Step 6:
After you've stopped crying, make yourself a cup of tea / pour glass of wine and go through the first column again. What expenses can you realistically cut down on? (Just so you know – halving the grocery money or stopping your RA is not realistic.)

Take a look at the following things:

  • How high is your monthly car payment? Why not get a cheaper car? Can your family get away with one car instead of two?
  • Can you cut down on water and electricity? (For our future's sake you should do this anyway.)
  • And what about that phone bill? Get savvy with services like Skype and MXit – you're kids are probably using it already.
  • Are you spending R50 a day on food at work, when you could just as easily make yourself a packed lunch?
  • Does your five year old really need designer takkies and clothes?
  • Should you maybe – gulp – buy a cheaper house?
  • Is your R800 night cream really making you look younger?
  • Is it time for a raise?

    Step 7:
    Now that you know how much money you're spending every month, keep that figure in mind when going about your day to day business. If you're genuinely flummoxed as to where your money is going, keep a daily expenditure diary in which you write down every single expense, no matter how small. (Do this secretly because people will look at you funny.)

    Step 8:
    Don't forget to update your budget every now and again.

    Are you a diligent budgeter or are you living beyond your means? Let us know how you manage your finances.