Make bud­get­ing a fam­ily af­fair

Grocott's Mail - - SOUL FOOD - STAFF RE­PORTER

One of the best life lessons you can teach your chil­dren is how to man­age money prop­erly. So why not bring them into the equa­tion from a young age? Al­fred Ramosedi, African Bank Group Ex­ec­u­tive: Sales and Mar­ket­ing, says learn­ing how to bud­get prop­erly and stick­ing to a bud­get is a dis­ci­pline every­one should learn. “A bud­get should make pro­vi­sion for the here and now, but also in­clude room for fu­ture goals like re­tire­ment or ed­u­ca­tion. How well you man­age your money and pay­ments now will de­ter­mine your fu­ture fi­nan­cial well­be­ing. The younger peo­ple are when they learn this prin­ci­ple, the more likely they are to at­tain their fi­nan­cial goals,” he says.

The first step is draw­ing up a bud­get. “The best way to do this is to sit around a ta­ble and get all fam­ily mem­bers to think about their monthly ex­penses. Make it a fun ex­er­cise. For the kids, this could in­clude things like sta­tionery, school trips, sports equip­ment, school lunches, tuck shop money, out­ings and so on,” says Ramosedi.

For the adults, re­mem­ber to in­clude quar­terly and an­nual ex­penses as well as daily cash spend­ing. In­clude any poli­cies such as re­tire­ment an­nu­ities, dis­abil­ity funds, med­i­cal aid and so on. Lastly, make a list of all your debt re­pay­ments.

Once a list of ex­penses has been drawn up, start work­ing on an in­come list.

Use cur­rent fig­ures from lat­est payslips, bills and bank state­ments. Re­mem­ber to in­clude any ad­di­tional in­come that you will be re­ceiv­ing, for ex­am­ple, grants, in­cen­tives, bonuses or part time in­come, etc.

“Only add the ad­di­tional in­come into your bud­get when you are sure of the ex­act amount that you will be re­ceiv­ing,” he adds.

Kids should also think about what in­come they re­ceive.

“This could in­clude pocket money, mon­e­tary gifts, cash re­ceived from do­ing chores and so on. Teach them how to add up their in­come and then speak to them about what they would like to spend it on. It’s a great op­por­tu­nity to en­cour­age sav­ing and the con­cept of fi­nan­cial goal-set­ting as they may need to save up for a spe­cial new toy or a fun ac­tiv­ity,” ad­vises Ramosedi.

Take your ex­penses and debt re­pay­ments and deduct these from your in­come to get an idea of what you have left over at the end of the month or if there is a short­fall. If you have a short­fall on your bud­get, in other words, you don’t have money left at month end, Ramosedi rec­om­mends cut­ting back on lux­ury items that you don’t need. “If you have ad­di­tional in­come use it to try and pay off debt. Start with the credit with high­est in­ter­est rate.”

Fi­nan­cial goal set­ting is then the next step. “Make a list of your short- and long-term goals, and know what they are. Think about things like grow­ing your fam­ily, ed­u­ca­tion, plan­ning for hol­i­days, sav­ings needs, up­grad­ing your as­sets and stan­dard of liv­ing, and re­tire­ment and fu­neral cover needs. De­ter­mine when you want to reach your goals and how long you will need to save for those goals,” he says.

He highly rec­om­mends in­clud­ing your fam­ily in your goal set­ting plan so that you can work to­gether to reach those goals.

“Re­mem­ber goals will only be reached if you make them part of your bud­get and sav­ing plans. Ev­ery mem­ber needs to be com­mit­ted and re­alise that they too will ben­e­fit from achiev­ing the goals.”

Make sure your goals are re­al­is­tic, achiev­able and mea­sur­able. “If you aim too high, you may get de-mo­ti­vated and you will not be able to ex­er­cise the monthly dis­ci­pline you need to get there. When set­ting your goals, also take into con­sid­er­a­tion your fam­ily’s needs and think care­fully about these. For ex­am­ple, you should not buy a new car if school fees are not be­ing paid.

Goal set­ting can only be suc­cess­ful if you un­der­stand how to set your goals and then how to achieve them,” says Ramosedi.

“Re­mem­ber to re­ward your­self when you see im­prove­ments and good fi­nan­cial be­hav­iours. Cel­e­brate as a fam­ily when goals are achieved. This should in­clude the small­est goals, such as sav­ing up enough pocket money to buy a new bike, to much big­ger goals like pay­ing off your home loan.

It’s a great way to bring the fam­ily to­gether and to share fi­nan­cial re­spon­si­bil­ity.

So don’t wait, get a bud­get go­ing and start mak­ing your fam­ily fi­nan­cial goals a re­al­ity,” con­cluded Ramosedi.

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