05 Jun Master Your Money: A Guide for the Youngins

By: Kuhle Mpahlwa | Founder and Managing Director – TPG Loans

Money is a tool that can measure success in life, and there’s plenty out there for those who know how to get it. Just like gravity, the rules of money are universal and unchanging. To start achieving financial success, you need to understand personal finance, and the first step is learning how to budget.

A budget is like a roadmap; it shows you how much you earn and how you spend, guiding you toward a secure financial future. It helps you make smart spending choices, set financial goals, and track your progress.

Here’s how to create a budget that fits your financial goals:

1. Know Your Income First, understand where your money comes from, and how often you get paid. This means knowing your take-home pay from your main job and any extra cash from side gigs or investments. Knowing all your income sources gives you a clear picture of your financial situation.

2. Control Your Spending Next, understand and manage your expenses. Break them down into three categories: fixed, variable, and discretionary.

Fixed Expenses: These are regular costs that don’t change, like rent, utilities, and insurance.

Variable Expenses: These change each month, like groceries, transport, and entertainment.

Discretionary Expenses: These are non-essential costs, like eating out or shopping for luxury items.

By sorting your expenses this way, you can see where your money goes and where you might be overspending.

3. Allocate Funds Wisely Once you know your expenses, set realistic spending limits for each category. This will help you keep track of your money and ensure you’re living within your means.

A popular budgeting guideline is the 50/30/20 rule:

• 50% of your income goes to needs (fixed and variable expenses)
• 30% goes to wants (discretionary expenses)
• 20% goes to savings and debt repayment

Adjust these percentages based on your circumstances.

4. Track and Adjust

Regularly check your spending against your budget. Use budgeting apps or tools to make this easier. If you notice you’re overspending in a certain area, reassess and adjust your budget. Flexibility is key to keeping your budget sustainable.

5. Educate Yourself

Take advantage of resources to boost your financial knowledge. Read books, attend workshops, or explore online courses about personal finance. Understanding financial concepts helps you make better money decisions.

6. Seek Guidance

Don’t hesitate to ask for advice from mentors, family members, or financial advisors. Learning from others’ experiences can provide valuable insights and help you avoid common mistakes.

By following these steps, you’ll be able to create a budget that helps you manage your money better and achieve your financial goals. Remember, the key is not just in creating a budget, but in actively managing and adapting it as your circumstances change.