HOW TO SHOCKPROOF YOUR BUDGET

IN A WEAK economy, managing your finances and making ends meet at the end of every month is similar to completing an obstacle course. However, reviewing and adjusting your household budget once a year, as the finance minister does for the country, can make it easier.

In the same way that the government takes a hard look at the state of the economy every February and puts measures in place to strengthen it, consumers need to reassess their challenges and opportunities annually. Here is how you can shockproof your household budget:

1. Commit to a budget.

◆ Compile a comprehensive household budget and stick to it.

◆ Make a list of wants versus needs and focus on the needs. If and when you can afford it, you can set aside some money for one family outing or treat a month.

◆ Educate your family about balancing a budget and get them involved with working out the family’s financial goals.

◆ Minimise unrealistic demands.

2. Reduce transport costs.

Look for schools closer to home if transport costs are decimating your budget or move closer to your workplace or children’s school.

3. Keep your family healthy.

◆ Plan healthy meals for your family, including lunch boxes for school and work. This helps avoid overspending on takeaways, tuckshop and canteen lunches.

◆ Having a healthy family will help reduce medical expenses.

◆ Cut out sugar for health reasons and save on sugar tax.

Stop smoking and reduce alcohol intake: this will save a lot every month. You will also avoid paying the taxes on tobacco and alcohol. As a nonsmoker, you’ll be healthier, and this will help to reduce medical costs.

Read or listen to the 2019 Budget speech on February 20 and take note of any taxation changes that could affect your financial decisions. To rent or to buy a property may be a question on your mind, for example. If so, consider the fact that properties under R900 000 are exempt from transfer duty.

4. Quit bad habits. 5. Stay up to date. 6. Keep saving.

◆ No matter what, don’t stop saving.

◆ Stay committed to your longterm goals, such as a tertiary degree for your child and a comfortable retirement for you.

◆ Take advantage of tax-free savings options.

7. Don’t live to impress.

◆ Don’t put yourself under pressure by trying to keep up with the Kardashians, Khumalos or the Karims.

◆ Live and dress according to your means and not according to your friends’ lifestyles (who may also be deep in debt behind the scenes).

8. Learn to say “no”.

◆ Don’t let your children push you into buying things they don’t need and you can’t afford.

◆ Teach your children about budgeting, planning and saving.

◆ Explain the importance of resisting peer pressure.

Just like our government does every year at Budget time, the toughest task is facing the reality of the situation and working out an achievable plan. Then work together as a family to stick to the plan, even during difficult months. You can also speak to an accredited financial adviser to help you stay on track.

John Manyike is Old Mutual’s head of financial education.