Ah, the New Year! A time of resolutions, fresh starts, and promises to finally stick to a budget. If you are like most South Africans, the idea of budgeting ranks right up there with a visit to the dentist – necessary, but not exactly fun. Yet, mastering the art of budgeting and expense tracking is crucial for financial wellness. Let’s dive into how you can create a budget that does not feel like a financial straitjacket.
Step 1: Know Thy Income
Start with the basics: how much are you bringing home each month? Consider your salary after tax (because SARS is not known for sharing your optimism about your gross income). Include any additional income sources, like that side hustle selling boerewors rolls, your part time hair salon or selling Tupperware.
Step 2: Track Thy Expenses
Before you can budget, you need to know where your money is going. Spend a month tracking every Rand. Yes, even the R20 spent on vetkoek on the way home counts. By the end of the month, you will have a clearer picture. You might be surprised to find out how much those little indulgences are adding up.
Step 3: Categorize and Conquer
Divide your expenses into categories:
Fixed Expenses: These are your monthly non-negotiables like rent, car payments, or insurance.
Variable Expenses: This category is a bit trickier. It includes groceries, entertainment, and the occasional splurge on biltong.
Savings and Investments (including your emergency fund): Yes, this is an essential category. Whether it is saving for a rainy day or contributing to a retirement annuity, pay yourself first.
Step 4: Set Realistic Goals
Now that you know what comes in and goes out, set realistic budget goals. If you have been spending R1 000 a month on eating out, slashing it to R100 is not just ambitious; it is a recipe for misery. Instead, aim for a more achievable reduction, like R700.
Step 5: Choose Your Weapon
Whether it is a good old Excel spreadsheet, a budgeting app, or a notebook, find a tool that works for you. There are great apps that cater to South African consumers, linking directly to your bank accounts and categorizing expenses for you.
Step 6: The Monthly Check-in
Treat your budget like a soapy – check in regularly to see what’s happening. This helps you adjust as you go along. Did you underestimate how much you spend on electricity? Adjust your budget accordingly.
Step 7: Adjust and Adapt
Life changes, and so should your budget. Your financial goals this year might be different from the last. Perhaps you are saving for a trip to Cape Town or planning to upgrade your car. Make sure your budget reflects these goals.
Keeping It Fun
Remember, budgeting is not about restricting your life; it is about empowering you to spend wisely. Celebrate small victories. If you stayed within your dining out budget this month, treat yourself to something small (key word: small).
Budgeting and expense tracking might not be the most exhilarating of New Year’s resolutions, but it is certainly one of the most rewarding. It is about creating a plan that works for you, not against you. With a bit of discipline, a touch of humour, and a good plan, you can turn your financial goals from a ‘someday’ into a ‘this year’. Remember, a budget is more than just numbers on a page; it is a reflection of your priorities – with a little bit of room for that impulsive chocolate bar at the checkout counter.
Start now…..your future self will thank you!
Created by Vuledzani Dangale, CFP® professional.
