July is National Savings month and it is not too late to get your finances in order and implement a budget to stay out of the red.
“Budgeting is the best way to gain control of your finances and make sure your money is going toward expenses that matter most to you. To be successful, you need to evaluate what these things are and set long and short-term goals towards financial peace of mind,” said Alfred Ramosedi, African Bank Group executive of sales and marketing.
According to Ramosedi, fixed expenses, like rent, car payments and school fees, are fairly constant and easy to work out but it is the flexible expenses, like food, clothing and entertainment, which need the most scrutiny and discipline. Meaning, after pay day, you should not be ‘making it rain’ with your money.
There are many budgeting apps and software that can assist you in starting your budget but pen and paper works just as good.
Four steps to an accurate and working budget:
- Track all your expenses – Debit orders are the easiest to track but the best way to deal with small expenses is to withdraw a certain amount each week or month and enter this in to your budget under ‘miscellaneous’.
- Describe items in detail – List your expenses by what they are rather than where you purchased them. This will help you to see how much you spend on particular items or in particular categories.
- Budget by month not by pay cheque – This way, you can get a fresh start every month and plan slightly longer-term. If you have a bad month, it’s in the past after 30 days and you can look forward to a better month when you may not have the expenses which threw your budget into disarray the previous month.
- Plan for fixed and flexible expenses – Flexible expenses, like entertainment, must be viewed with the same seriousness as fixed expenses but will most certainly require more self-control. Remember also to budget for occasional annual expenses, like car maintenance or insurance and other increases.
“A good way to look at a budget is a ‘spending plan’ – a way to be aware of how much money you earn, what you need to pay and how much, if any, is left over. A budget is your key to getting the most out of your money and averting a financial crisis,” Ramosedi added.
