Make or re­vise your bud­get

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE -

If you do not al­ready have a bud­get, now is the time to draw up one. Bud­get­ing may be a chore, but it is also the most pow­er­ful tool you have to man­age your money and en­sure you stay out of debt and start build­ing some wealth. A bud­get will help you to see where you are spending your money and whether you are liv­ing within your means.

If you are spending more than you earn, you can use a bud­get to iden­tify where you can cut your ex­penses to en­sure that you stay out of debt.

A bud­get can also help you to iden­tify how much you can af­ford to save each month, and sav­ing will help you to grow your money. Then you will be able to af­ford more than you would if you bought on credit.

When you save, your money works for you, earn­ing in­ter­est or growth that you can en­joy. When you buy on credit, you pay in­ter­est on your bor­row­ings to a bank, a shop or the fi­nance house that lent you the money. In the end, you will pay much more than the ini­tial price – pos­si­bly twice or three times as much – once all the in­ter­est has been added to the ini­tial price.

If you have al­ready dis­cov­ered that bud­get­ing is the best way to con­trol your fi­nances, the start of the new year is a good time to re­view your bud­get.

Per­haps you have run up a lot of debt over the fes­tive sea­son and need to make pro­vi­sion in your bud­get to pay off that debt as quickly as pos­si­ble. You may also have to pro­vide for in­creases in pol­icy pre­mi­ums, such as your life and dis­abil­ity cover or your re­tire­ment an­nu­ity if it has an an­nual in­crease, and for in­creases in the likes of school fees, gym mem­ber­ships or med­i­cal scheme con­tri­bu­tions.

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