The Budget Basket

Cash is King – Debt is Dirt

Not all debt should be treated equally, but short term loans and credit cards are the most expensive purchases you’ll make in your lifetime

Debt that pays towards owning an asset – i.e. your house, or funding your business has benefits

The Three Golden Rules of Money Management

1. Don't spend more than you make.

2. Always plan for the future.

3. Help your money grow.

The Budget Basket

• Essentials

• Non-essentials

If you go to the grocery store, most people take a list of what they need to get. Without the list there is a good chance that we are going to forget something. The list acts as our guide. A budget is no different, it’s a financial list that guides us on our finances. Your budget helps you track money IN and money OUT.

Money IN should NEVER be LESS than Money OUT – This is not sustainable.

So what steps need to be taken

Step 1:

Create your shopping list (Budget) – this is your starting point and will provide you with the important information.

Step 2:

Check the list and separate the list into Essential and Non-Essential items – What do you need and what do you want. The size of your basket will determine if there is room for non-essential items.

• Essential items – These will be groceries that you and your family will always require to sustain yourselves. i.e. bread, milk, fruit, vegetables, etc.

• Non-essential – Items that you don’t need, but items that we want – i.e. sweets, snacks, juices, etc.

Your budget should follow a similar principal

• Essentials – Rent, bond payments, water, electricity, school fees, transportation, food essentials, medical aid (if affordable), insurance, phones, and SAVINGS**

• Non-Essentials – Extra clothing, fancy cars, expensive purchases using short term debt, unnecessary things, eating out, ordering out, and expensive holidays.

**SAVINGS – Your monthly savings should for part of your monthly budget and essential expenses each month.

Step 3:

Fill your basket with the essentials and if there is room in your basket then you can add the non-essential items to your basket.

Be disciplined – If it doesn’t fit then leave it out – If it’s not affordable then you DON’T buy it.

AFFRODABILITY – It is the excess space you have in your basket once you have your essentials. In budget terms, once all of your essential expenses have gone off your account it’s the spare cash you have available.

This = peace of mind that you can spend this money Guilt free

Step 4

Review your basket, or budget list regularly.