10 Tips for creating a manageable budget
The idea of a budget is to help manage your expense and income in a way that allows you to save more money. Here are our top ten tips for creating a manageable budget.
1. Start Simple
The easiest starting point would be making a comprehensive list of all your expenses, income, saving and debt. This way you know what your financial status is.
2. Set a goal
Sticking to a monthly budget may be easier when you have a long term goal in mind. While those shoes may be the best thing you have ever seen, the goal of saving for a luxurious holiday may outweigh the very short satisfaction level of new buying shoes. Clearly define the need for your budget eg: get out of debt, saving for my child’s education etc.
3. Remove unnecessary expenses
Sometimes we think our budget cannot be improved but by cancelling the gym contract you signed two years ago could be beneficial if you are only going once every six months. Analyse each expense line and see if you are able to cut back or completely eliminate the expense.
4. Take a month to track spending
That coffee each morning that seems like a little expense adds into a big expense at the end of the month. Track every cent you spend and compare it to your budget, you may notice discrepancies. Make adjustments in your life and budget that better suits your needs. Cut everyday coffee to two a week and all of a sudden you have R500 extra each month.
5. Pay off debt
The easiest way to decrease expenses is to pay off debt. Make a list of all your outstanding debt and their interest rates. While most people believe paying off a smaller amount may benefit you, larger amounts may also include more benefits. The rule is to pay off debt with the highest interest rates first as this is ultimately is costing you more.
6. Use another set of eyes
While we may think we have the best understanding of our own finance, another set of eyes may notice areas which could improve. Get a trusted friend, family member or partner to take a look at your budget. They might think spending hundreds on theatre tickets is absurd it is ultimately your decision to remove or cut down on your visits to the theatre.
Don’t be afraid to invest money, most South African banks have investment opportunities for all levels of clients. Ask your bank to explain the different types of offer they have and try to invest your money.
8. Monitor your spending
Budgets are tough when you start your first one but if you monitor your spending and adjust according to your lifestyle you will stay on top of things. Always be realistic when cutting or adding expenses in your budget, we all need rewards for working hard but we also need to save for our futures and manage our financial status.
9. Increase your income
Today we are able to earn money in more ways than one and working multiple jobs has become more popular amongst the younger generations. If you are unable to save extra money or if you do not have enough money to cover expenses, invest a little in starting a side business. There are many opportunities online, try to identify a need and try to fulfil that need.
10. Don’t be too hard on yourself
Money, religion and politics are three subjects we tend to stay away from in conversations, and while some people are open about their financial status do not think others do not have the same issues. Don’t be too hard on yourself if you buy an extra doughnut or if you just need that coffee today. Try again tomorrow and keep monitoring your spending