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!

Glamour (South Africa) - - Front Page -

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.

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