Most people don’t budget properly because they
were never taught to. There are no courses I am aware
of and no schools that teach children how to budget, spend
or manage their money.
The word 'budget' normally means self-deprivation to
most people. It normally means that you have to go without
in order to save money. Instead of drawing up a budget,
create a spending plan. Start with what you would really
like to spend instead of what you can’t spend.
Speak about budget, but think spending plan.
Start by recording every expense, even snacks, tips for
parking attendants and the daily bread, milk and newspaper,
for one month. The process itself is time-consuming to
begin with, but it's not difficult. Write down all your
income on one list and all your expenses on another, broken
into categories for fixed expenses like the house and
car payments; flexible expenses that vary each month,
including the phone and electric bills; and discretionary
expenses, such as gifts and entertainment.
Compare the two lists to see where you overspend and
adjust your spending plan accordingly. You can make the
best budget, but if you don't record your spending, you
are wasting your time. Recording where and how you spend
your money can be a major eye-opener. Remember that merely
writing it down is not enough. You must use the plan to
guide your spending.
The major categories on
your spending plan should include:
1.
Housing
Rent or bond payments, property taxes, electricity,
gas, oil, water, telephone, repairs and maintenance.
2.
Insurance
Home, life, disability, health, and cars
3.
Transport
Car payments, petrol, car maintenance and repairs,
bus, taxi fares, tolls, and parking
4.
Clothing
Buying clothing and dry cleaning
5.
Food
Groceries, work and school lunches
6.
Entertainment
Eating out, holidays, music, sports, television, memberships
7.
Savings
and investments
All investments - unit trusts, shares, endowment policies
etc and savings
8.
Health
care
Medications, doctor, dentist, clinic, hospital, glasses,
hearing aids, medical aid contributions
9.
Personal
care
Hair care, cosmetics, toiletries, nappies, cigarettes
and alcohol
10.
Family
Personal allowance, child-care, children's pocket
money, maintenance
11.
Donations
Religious, political, and charitable
12.
Education
Books, magazines, hobby expenses, lessons, tuition
and newspapers
13.
Professional
expenses
Memberships, publications, travel and tax-deductible
expenses
14.
Miscellaneous
Taxes, pets and gifts
15.
Credit
payments
Credit cards, department store cards, student loans,
and other loans and debts
TIPS ON
SAVING MONEY
1.
Plan
your spending
When you plan your spending, you may find you spend
more wisely, because you're taking control. Don't
buy on impulse. If this is a problem for you, a
spending plan will be a great help. Tell yourself
that if it's not in the budget you can't have it
– and stick to it.
2.
Be
honest about your financial situation
Many people try to hide financial problems from
themselves or family members. Not facing your problems
can be destructive, because the worry and stress
that financial uncertainty and lack of cash cause
may be worse than the financial problem itself.
It's important to take a realistic look at your
situation and actively seek solutions to your problems.
Nothing you do is going to change your financial
situation overnight, but each time you make a sound
financial decision, it will make a small difference
and every financial decision you make will impact
your life over an extended period of time.
3.
Pay
yourself first
Make saving money every month your priority. If
you wait until the end of the month to save any
leftover cash, you will find yourself without a
nest egg when you need it most. A very good way
of saving money is to open a [separate] savings
account into which you transfer 10% of your earning
via a debit order every month.
4.
Record
your spending
Keeping a complete record for just one month will
help you to face your spending. Adjust your spending
plan and pay off debts with the extra money –
every R100.00 you save and pay off on debts will
bring you closer to being debt-free.
5.
Live
within your means
People tend to spend what they earn. Salary increases
quickly disappear and any cash in your purse is
spent within hours. Stop yourself from impulse buying.
Leave your credit cards in a safe place for a few
months so that you’re not tempted to spend
the available credit - or cut them up! Go without
buying new clothes, shoes and expensive make-up
for a month or two. Make a decision to go home to
think about a purchase before spending the money.
Nine out of ten times you will change your mind
about buying it.
6.
Buy
value-for-money items
Look for opportunities to get more value from each
Rand spent. Buy in bulk. Buy clothing, furniture,
and household goods when they are on sale –
and only when you really need it. Consider buying
a used car instead of new. Brand new cars depreciate
substantially – on the day you buy it!
7.
Become
debt-free as soon as possible
By reducing debt, you minimise interest and finance
charges. When you are tempted to charge a purchase
to your credit card, remember that you are committing
yourself to pay for it with income you haven’t
yet earned.
8.
Stop
eating out or buying take-way food
Eating out should be a treat – not a habit.
Apart from the fact that most take-way meals are
unhealthy to eat, it is extremely expensive. A family
of four pay between R300.00 and R400.00 to eat out.
If you include wine and deserts, the meal could
cost around R500.00.
9.
Buy
a house instead of renting
Rentals are extremely expensive. Buying a house
is an investment because you not only recover your
monthly instalments, but you will almost certainly
make a profit when you resell.
10.
Keep
car expenses down
Car expenses are very high in South Africa. Most
households own more than one vehicle – sometimes
three or four. The more cars you own, the higher
the costs for insurance, repairs, petrol and parking.
Remember, a good second-hand car is a better investment
than a brand new one, due to the fact that most
brand new cars de-value the moment you drive it
off the showroom floor.
11.
Borrow
or hire
If the item won’t be used frequently, borrow
it from someone or hire it.
12.
Increase
your income
If you are in dire straits find yourself a part-time
or temporary job to help supplement your income.
13.
Build
a nest egg
Having a nest egg (cash reserves) is vital for that
“rainy day.” It will help keep you out
of debt when emergencies, such as a major car repair
or short-term disability, arise.
In a perfect world, we would all avoid too much debt
and would never have to deal with the desperation of being
unable to meet our credit card payment obligations. We'd
never have creditors hounding us for payment. We'd never
know the frustration of not being able to afford what
we really want because every extra cent has to go towards
keeping up with the minimum payments on our credit cards
- but this isn't a perfect world, and unfortunately these
distressing situations are the norm for many people.
If you find yourself in this position, or heading there,
take control of your spending now. Don't wait until your
situation is so dire that you have few options available
to you. Cutting back on excess spending does not mean
that you must continually deprive yourself. You will find
that when you live within your means, and pay yourself
first, your debts will decrease as your savings grow.
A spending plan will be one of your wisest financial decisions.
Services
Seta
Accreditation
SETQAA
Decision Number 2075
COMENSA
Membership
Number
J00147_MEMT_SF
Awards
The
Greenpepper Enterprise Award is awarded to South African companies
that excelled in their industries, created economic growth or new
job opportunities for the people of South Africa.
