e Percentage Budget
If you’re laid-back yet money-conscious, this budget lets you manage spending without checking your balance with every swipe of the credit or debit card. First, divide your expenses into fixed costs, financial goals and flexible spending. The goal is to have 50% cover fixed costs (housing, transport and debt ), about 20% for financial goals (savings and retirement), and about 30% for flexible spending (your day-to-day living). Our hypothetical friend Dana gives it a go:
Dana earns R420 000 (R334 800 after tax) and gets paid R27 900 monthly (after tax). She pays R10 500 a month for rent and utilities, and R5 500 for her car payment, insurance and petrol. An additional R2 000 goes towards student loans. Her fixed expenses cost her R18 000 each month, approximately 64,5% of her paycheque.
With the R27 900 that hits her account each month after tax, Dana tucks away five percent of her income (R1 400) into a retirement annuity and R2 000 a month (or about 7,2% of her paycheque) into a savings fund, with the goal of saving up six months of living expenses. Keep in mind: retirement contributions should be out of sight, out of mind. Which means Dana puts a total of about 12,2% of her money towards financial goals. If Dana saved the ideal 20% of her paycheque (R5 580 a month) instead of 12,2%, it would leave her with only R4 320 a month to spend on dayto-day living expenses – a figure that’s doable but not the most realistic.
Dana leaves 23,3% (or R6 500) for flexible spending. If she gets the promotion and raise she’s working towards, she plans to keep her fixed expenses and the R6 500 for flexible spending the same, then put the difference towards her financial goals, making her percentages align more with her ideal budget.