FEW things strike more fear into the hearts of people than setting up a budget.

FEW things strike more fear into the hearts of people than setting up a budget.

We all know we need one, a few of us actually have one and fewer still manage to live within it.

Why is it so intimidating?

Perhaps it seems like such an overwhelming task that you don't even want to think about it.

Perhaps you don't know where to start. Perhaps you think it will require hours and hours to do. Whatever your reason, now is the time to start.

Step 1: Where to start

There are two essential things you need to know when preparing a budget: what comes in and what goes out. That's all a budget is - income and expenses.

Start by collecting old cheque counterfoils, receipts and so on. A survey of the last three months is good enough.

Next, assemble your expenses for two to three months.

Step 2: Determine the time frame

Decide if you want to budget weekly or monthly. How often you get paid may influence this decision. Most people budget by the month, but you might have expenses that happen quarterly, semi-annually or even annually - things such as car registration or subscriptions.

Step 3: Choose atracking method

Choose a method for tracking expenses. You can set up a spreadsheet programme or even use a pen and paper.

Step 4: Establishcategories

Select categories that fit your needs. This depends on how detail-oriented you want to be.

General categories might include a house, car, food, medical, insurance, utilities and so on. Specific categories, usually best as subcategories, could include: vehicle insurance, fuel, maintenance; Food: Groceries; takeout; dining out and so on.

Step 5: Establish

spending amounts

Review income and expenses. Put the expenses into the categories you have established so you can see where you've been spending.

Total them and compare them to your income. If you're overspending, determine where you can cut down. Establish new budget amounts for the period you have chosen, based on past expenses.

To budget for quarterly, semi-annual or annual expenses such as 12-month newspaper or magazine subscriptions, divide payment by 12 and budget that amount every month. Put it where it won't be spent.

Try to be flexible. Budgeting every last cent you earn might not be the best course because there are always unpredictable expenses that pop up.

Be sure to budget some savings, even if all you can save is R5 a month. It's great to get into the habit of paying yourself first.

Step 6: Track your income and expenses

Whether it's daily or weekly or just every few days, enter your expenses into your tracking method.

If you put it off too long it will become overwhelming and you'll give up. Devoting just a few minutes a day is a lot better than three hours at the end of the month.

Keeping a close track of your expenses will also help you keep to your budget. You'll be more aware of your money and more careful not to spend what you don't have.

Collect receipts for everything, especially things you buy with cash. This will make tracking easier.

If a receipt has purchases that fall into more than one category, divide them up accordingly.

Step 7: Revisit thebudget often

Do this periodically. Review expenses. See what's working and what isn't. Rework the numbers as necessary.

If you're single this should be pretty easy, but if you are married you might have one or two incomes in your household.

Both people should know where the money is going, regardless of who is earning it.

Remember that budgets are not set in stone. You're in control, not your money. -