Money advice everyone needs

Ouuuuuuch! If that’s the sound of your pay cheque trying to make it to the end of the month, you need this story. Straightforward budgeting advice, here!

Times are definitely tough and it’s tempting to borrow money, whether that means using a store card to buy those boots you fancy or running an overdraft on your bond or credit card so that you can cover unexpected expenses or even rent (and the dress to go with those boots!). But of all the traps in life to fall into, the debt trap is one of the worst, and we want to keep you well away from that slippery slope. And there’s a simple solution that can help keep your future and your money stay safe: “Start budgeting,” recommends Andrew van der Hoven, head of relationship banking at Standard Bank. “Get into the habit of accounting for every cent and you’ll soon see where you’re overspending, where you need to cut back, and where to save.” Here goes!

1 Draw up a budget

Grab a cup of tea, a piece of paper and a pen, and get started! Draw up a spreadsheet with the first column for your essential needs: rent or bond, food, school fees, transport and electricity. Next to each item, put the monthly amount needed. Now make a second column for policies like insurance, life cover, savings plans and memberships like the gym. Finally, list your luxuries, including clothes, entertainment and data. Subtract the essentials from your income, then subtract your policies. Any money left over can go to luxuries, but the ideal is to put anything extra you can spare into your savings.

2 Plan for emergencies

It’s impossible to know when you’ll be faced with an emergency, but you can take precautionary action by creating an emergency savings fund for unexpected expenses. Keep this apart from your general savings fund, and don’t be tempted to touch it! Having medical, life and funeral cover will also ensure that you and your loved ones are financially prepared for any unexpected deaths or medical emergencies.

3 Set realistic money goals

Whether you’re saving for a holiday or extra education and career training, set goals you can stick to, rather than ones that sound good, but simply can’t be met. You can also make separate savings funds for special goals, like travel. Know that you will fall off the wagon sometimes and don’t berate yourself when you do. Just revert to your budget and keep going. Consistency is the key.

4 Keep a daily spending log

Not sure where your money goes? Keep a money diary for a month, including every single thing you buy, and then add up the scores at the end. You will soon see where you are spending, and spot where you can save.

5 Take charge of your spending

Follow these savvy tricks and you’ll be winning all the way to the bank!

Ditch the denial

Ask yourself, “Is there anything or anyone who’s influencing my spending?”, and then decide on the best way to use your money. Being in debt prevents you from building wealth, but the little things you do on a daily basis, like buying groceries in bulk or taking a packed lunch to work, have a big impact on your finances – and these are things that you can control.

Distinguish between your wants and needs

In the age of social media, it often seems as if everyone else is living the life. Don’t fall for the illusion! And don’t make yourself financially vulnerable just to impress other people, who don’t ultimately care all that much anyway. Being debt-free and money-savvy is a better accessory than a pair of designer shoes. So how about finding costeffective ways to live with style? Dinner parties where guests brings their favourite dishes, for example? A home movie club, with popcorn and great DVDS? An evening of swapping clothes with your favourite girlfriends? And how about a tailor who updates those clothes you never wear because they don’t fit you properly?

6 Update your budget on a regular basis

When prices rise, you may have to set aside more money for essentials. Equally, you can increase the amount that you put away for your goals and luxuries if you get a salary increase or a bonus.

7 Sort out your debts and cut up your store cards if you must!

Being in debt has two costs: the amount of interest you pay each month (and that’s a lot!) and the lostopportunity costs of not having saved that money. And that’s to say nothing of the emotional strain! Make a list of what you owe, and prioritise from the most to least urgent. Now make it a goal to settle them, bit by bit, every month. Even small amounts help, so channel all of your spare change into servicing these debts until they have completely vanished, leaving you closer to financial wellbeing.