Preparing a Personal Budget – Personal Budgeting (Senior 2 Entrepreneurship) | Ganzaa

Personal Budgeting

Lessons

Senior 2 · Entrepreneurship

Personal Budgeting

4 lessons

Lesson 4 of 4

Preparing a Personal Budget

25 min

Why this matters

Knowing what a budget is does not help until you can make one. In this lesson you will build a monthly personal budget step by step, then compare it with what really happened, which is the part most people skip.

The elements of a personal budget

Period: the time the budget covers (a week, a month, a term).
Income: all the money you expect to receive, such as pocket money, wages, or sales from a small project.
Expenses: what you expect to spend. Fixed expenses stay the same each period (rent, school transport); variable expenses change (snacks, airtime).
Savings: planned as a line of its own, paid first, not left to chance.
Emergency fund: a small amount for the unexpected.
Balance: income minus all planned expenses and savings.

Steps to prepare a personal budget

Choose the budget period.
List and total your expected income.
List your expenses, needs first, and estimate each one; include savings and an emergency fund.
Compare the total with income. If there is a deficit, cut wants first, then variable expenses, and only then consider extra income.
Follow the budget and record what you actually receive and spend.
At the end of the period compare budget with actual, find the differences, and improve the next budget.

Worked example: Uwase's monthly budget

Written by Ganzaa. Uwase is an S2 student in Nyanza. She receives 8,000 Frw pocket money a month and earns about 12,000 Frw a month selling eggs from her family's hens.

Item	Type	Budget (Frw)
Pocket money	Income	8,000
Egg sales	Income	12,000
Total income		20,000
Savings (paid first)	Savings	4,000
Chicken feed for the egg project	Need (business)	3,000
Transport to school	Need, fixed	4,000
Exercise books and pens	Need	2,500
Soap and toiletries	Need	1,500
Airtime and data	Want, variable	1,500
Snacks	Want, variable	2,000
Emergency fund	Savings	1,000
Total planned spending and savings		19,500
Balance		500 (surplus)

Total income = 8,000 + 12,000 = 20,000 Frw.
Total planned = 4,000 + 3,000 + 4,000 + 2,500 + 1,500 + 1,500 + 2,000 + 1,000 = 19,500 Frw.
Balance = 20,000 − 19,500 = 500 Frw, a surplus she adds to savings.
Savings rate = 4,000 ÷ 20,000 × 100 = 20% of her income, before the surplus.

Comparing budget with actual

Item	Budget (Frw)	Actual (Frw)	Difference (Frw)
Snacks	2,000	3,500	1,500 over
Airtime and data	1,500	2,000	500 over
Transport	4,000	3,500	500 under

Snacks and airtime, both wants, went over by 1,500 + 500 = 2,000 Frw in total; transport came in 500 Frw under. Next month Uwase can set a weekly snack limit and buy a data bundle instead of small top-ups.

Tip

Exam technique. Lay a budget out as a table with totals, and show the subtraction for the balance. When a budget is in deficit, the examiner expects you to cut wants first and to protect needs and savings.

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Practice

Ishimwe's take-home pay is 130,000 Frw a month. He plans rent 35,000; food 40,000; transport 15,000; airtime 5,000; savings 20,000; support to his parents 10,000; clothing 5,000. Is his budget balanced?

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Solution: 35,000 + 40,000 + 15,000 + 5,000 + 20,000 + 10,000 + 5,000 = 130,000 Frw. Income minus spending = 0, so it is balanced.

What percentage of his pay does Ishimwe plan to save?

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Solution: 20,000 ÷ 130,000 × 100 ≈ 15.4%.

Mutesi budgeted 600 Frw for bus fares in a week but spent 900 Frw. What is the difference?

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Solution: 900 − 600 = 300 Frw over budget.

Name two variable expenses and two fixed expenses for a student.

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Solution: Variable: snacks, airtime, entertainment. Fixed: school transport paid monthly, a fixed contribution to a savings group.

Summary

Elements: period, income, expenses (fixed and variable), savings, emergency fund, balance.
Steps: choose the period, total income, list and estimate expenses (needs first, savings included), compare and adjust, record actual, review.
Comparing budget with actual shows where money leaks and improves the next budget.

Sources and credits

Personal budget: Wikipedia contributors, Wikipedia, CC BY-SA 4.0, adapted by Ganzaa.

Uwase's budget, the comparison table and the practice items are written by Ganzaa.

This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.

1Why this matters

2The elements of a personal budget

3Steps to prepare a personal budget

Worked example: Uwase's monthly budget

4Comparing budget with actual

Practice

Why this matters

The elements of a personal budget

Steps to prepare a personal budget

Comparing budget with actual