Building a simple monthly budget

A budget is a plan for your money. It shows what you expect to receive, what you need to spend and what you can put aside. It does not need to be complicated. A notebook or a note on your phone is enough.

Step 1: Add up your income

Write down all the money you receive in a typical month. Include your salary or business takings, regular support from family, including money sent from abroad, and any other regular income. If your income changes from month to month, plan with the amount you receive in a quieter month.

Step 2: List your spending

For one month, record everything you spend, however small. Then group your spending into categories.

• Essentials: rent, food, water, electricity and transport
• Commitments: school fees, loan repayments and contributions to a saving group
• Family support and community obligations
• Personal spending: phone credit, data, clothing and outings

Step 3: Build your plan

Now plan the month ahead. Treat savings as a fixed line in your plan, not as whatever is left over. The example below is for illustration only.

An illustrative budget

Imagine a household with a monthly income of D10,000. Its plan might look like this:

• Rent: D3,000
• Food and household items: D2,500
• Transport: D1,000
• School costs: D800
• Family support: D700
• Electricity and water: D600
• Phone and data: D400
• Savings: D1,000

Total planned spending and saving: D10,000. The plan balances, and the household saves one tenth of its income each month. Over a year, that adds up to D12,000.

Planning for large yearly costs

Some costs come once a year, such as school fees or festivals like Koriteh and Tobaski. Divide the expected cost by twelve and set that amount aside each month. For example, if school fees of D6,000 are due once a year, saving D500 a month covers them.

Step 4: Review and adjust

At the end of each month, compare what you planned with what you actually spent.

• If you spent more than planned, find the category that ran over and decide where to cut back next month.
• If you have money left over, add it to your savings or use it to pay down debt.
• If your spending is regularly more than your income, protect essentials first, then look closely at personal spending and any costly borrowing.

Tips that help

• Keep a small amount for emergencies so that you do not need to borrow.
• Agree the budget with your household so everyone knows the plan.
• Decide in advance how much you can afford to give or lend to friends and relatives.
• Check your bank statements and mobile money records against your notes.
• Be patient. A budget usually takes two or three months to settle.