Many South Africans started 2018 with a financial hangover after overspending in December. If you were a bit too merry with your credit card over the festive season, don’t despair – it is possible to have a more financially friendly year, starting now.
“If you’re not sure where to start, a budget is always a smart first step. This will help you feel more in control, knowing where your money is going each month and ensuring you live within your means,” says Graham Craggs, spokesperson for Budget Insurance.
Here is a 6 step guide to smart money management:
1. Draw up a budget. Start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
2. Small adjustments can make a meaningful difference over the long term. Channel the extra money you have into paying off your debt faster, starting with those with the highest interest rates first. As your debt repayments start getting smaller, you will have more and more money to allocate to your personal savings and other more worthwhile causes – such as saving for retirement planning, a deposit on a new house or a holiday.
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3. Set a savings goal for yourself and consider saving as a non-negotiable. Whether your goal is to put away R250 or R1000 a month, put it in your budget and stick to it.
3. Be honest about your debt obligations and your expenses. This so that you have a clear and realistic picture of your true monthly spend.
4. Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save on electricity costs.
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5. Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.
6. Use your smart-phone, smartly. – when you’re creating a budget, there are many free apps that make budgeting easy.
