FACULTY OF BUSINESS SCIENCES

DEPARTMENT OF PERSONAL FINANCIAL MANAGEMENT (FDB 201)

NAME: DANNY D JONAZI

REG NUMBER: R2211344F

LEVEL: 2:1

LECTURER: MRS CHAWARURA

INDIVIDUAL ASSIGNMENT: Create your personal budget for this month
given your current level of income.

Certainly! Here's a step-by-step guide to creating a personal budget:

Step 1: Determine Your Income

Calculate all the sources of income you have in a month. This may include your
salary, freelance work, rental income, or any other sources of income.

Step 2: List Fixed Expenses

Identify the fixed expenses that you have to pay every month. These are expenses that
remain relatively constant. Examples include rent or mortgage payments, utilities
(electricity, water, internet), insurance premiums, and loan repayments.

Step 3: Estimate Variable Expenses

Consider variable expenses that may fluctuate from month to month. These expenses
can include groceries, transportation (fuel, public transportation fares), dining out,
entertainment, and personal care items. Estimate an average amount based on your
past spending habits or by examining your bank statements.

Step 4: Account for Debt Repayment

If you have any outstanding debts, allocate a portion of your budget for debt
repayment. This could include credit card bills, student loans, car loans, or personal
loans. Determine the minimum payment required for each debt and consider
allocating additional funds if possible to accelerate debt repayment.

Step 5: Set Aside Savings

Prioritize saving for your future. Allocate a specific amount or percentage of your
income to savings. It's important to build an emergency fund to cover unexpected
expenses, save for future goals (such as buying a house or retirement), or invest for
long-term wealth accumulation.

Step 6: Consider Irregular or Annual Expenses

Take into account any irregular or annual expenses that may not occur monthly but
need to be budgeted for. Examples include annual subscriptions, vehicle maintenance,
medical expenses, or holiday gifts. Divide these expenses by 12 to determine the
monthly allocation needed.

Step 7: Calculate Disposable Income

Subtract your total expenses (fixed, variable, debt repayment, savings, and irregular
expenses) from your total income. The resulting amount is your disposable income,
which can be used for discretionary spending or additional savings.

Step 8: Review and Adjust

Review your budget to ensure that your total expenses do not exceed your income. If
they do, you may need to make adjustments by reducing discretionary spending,
finding ways to increase your income, or reevaluating your financial priorities.
Here's my personal monthly budget:

Income: $
An Allowance 200
Side Hustle 80
Total income 280
Fixed Expenses:
Rent 100
Variable Expenses:
Groceries 50
Transportation 5
Personal care (toiletries, haircuts) 20
Total expenses 175 (175)
Surplus 105

In this budget, I indicated my monthly income of $280 and expenses totaling $175 ,
leaving a surplus of $105. They allocate $1,050 .The remaining $175; $100 is set
aside for discretionary spending, such as hobbies and travel and $75 for general
savings

Certainly! Here are some additional details about budgeting and its importance:

Tracking Expenses: Budgeting allows you to track your expenses accurately. By

recording and categorizing your expenditures, you can gain a clear understanding of
where your money is being spent. This awareness helps me identify areas where I can
cut back or make adjustments to achieve my financial goals.

Prioritizing Spending: Budgeting helps you prioritize your spending based on your
values and goals. It allows you to allocate your income towards the things that matter
most to you, whether it's saving for a down payment on a house, paying off debt, or
taking a dream vacation. By aligning your spending with your priorities, you can
make conscious financial decisions.

Controlling Debt: One of the significant benefits of budgeting is its role in debt
management. By allocating a portion of your budget towards debt repayment, you can
systematically reduce your outstanding balances. By making regular payments and
avoiding additional debt, you can work towards becoming debt-free and improving
your financial well-being.

Building an Emergency Fund: Budgeting helps you set aside money for unexpected
expenses or emergencies. Having an emergency fund provides a safety net and
prevents you from relying on credit cards or loans during challenging times. Aim to
save three to six months' worth of living expenses in your emergency fund to handle
unforeseen circumstances.

Planning for Long-Term Goals: Budgeting is essential for planning and achieving
long-term financial goals. Whether it's saving for retirement, buying a house, or
funding your child's education, budgeting allows you to allocate funds towards these
goals consistently. By setting aside money regularly, you can make progress towards
your aspirations.
Adjusting to Changing Circumstances: Life is full of changes, and your financial
situation may evolve over time. Budgeting allows you to adapt to these changes by
reviewing and adjusting your spending patterns. Whether you experience an increase
in income, a decrease in expenses, or a major life event like marriage or having a
child, budgeting helps you stay on top of your finances and make necessary
modifications.

Reducing Financial Stress: Financial stress can have a significant impact on your
overall well-being. Budgeting provides a sense of control and allows you to plan for
the future, reducing anxiety about money matters. By having a budget in place, you
can make informed decisions, avoid impulsive spending, and have peace of mind
knowing that you are managing your finances responsibly.

When it comes to saving money, individuals may have various goals depending
on their financial priorities and circumstances. Here are my savings goals:

Emergency fund: I am saving money for unexpected expenses or financial

emergencies, such as medical bills.

Down payment for a home: Saving for a down payment to purchase a house or
property.

Education savings: Saving for future education expenses, such as college tuition or
vocational training.

Investment opportunities: Accumulating savings to invest in stocks, bonds, real

estate, or other investment vehicles to potentially grow wealth over time.

Here are some several reasons why I chose not to translate my savings into
investment

Lack of knowledge or confidence: Investing requires knowledge and understanding of

financial markets and investment instruments.So I am not familiar with investment
options, so I opt to keep my savings in traditional savings accounts.

Short-term financial goals: Personally I have short-term financial goals or anticipate

needing access to my savings in the near future,I may prefer to keep my funds liquid
and readily available rather than tying them up in investments that may have
restrictions on withdrawals.

Immediate financial needs:I have immediate financial needs or obligations that

require their savings to be readily accessible, such as paying off debt or covering
unexpected expenses.

Personal preference or comfort: Personally I simply feel more comfortable with the
idea of keeping my savings in cash or traditional savings accounts rather than
investing in potentially volatile markets.
Income Statement for Previous Month:
$
Total Income 280

Expenses:
Rent (100)
Groceries (50)
Personal care (20)
Transportation (5)
Dining out (20)
Entertainment (20)
Phone bills (20)
Utilities (30)
Surplus 15

Based on this income statement analysis, I can easily identify areas where I may
need to make adjustments in my current budget:

Reviewing the expenses and categorize them ,help me to see where my money is
going. For example,I noticed that I spend more on dining out, entertainment, phone
bills and utilities than I initially anticipated. Looking for areas where I can reduce
expenses. For instance, if you notice that my entertainment expenses were higher than
expected, i might decide to cut back on non-essential activities or find more
affordable alternatives