Creating a budget and keeping it is like news year’s resolutions for many; we create it with determination, but somewhere along the way we drop the ball in terms of following through.
Without creating a realistic budget that works for you it can be difficult to manage. Here are some handy tips on how you can create a budget that splits your finances to cover your expenses.
Making sense of your Rands
After the deductions have been made on your income, along with the debit orders, what you are left with needs to be carefully spread between your needs and wants. It’s all about living within your means.
Setting up a realistic budget is the first step to maintaining your finances until payday. Starting off with the important expenses such as policies, medical aid, bond, insurance, utilities, transport costs, groceries, or educational expenses can let you know where you stand in terms of the rest of your budget. Alternatively, you could use the 50/20/30 rule. This can help you adjust your saving and emergency accounts to something realistic instead of burdening you.
Remember to include the cost of what you spend on entertainment. Having the numbers in front of you can give you the big picture in terms of where you are losing money and what you need to cut back on to help you save more.
Set financial goals
A sense of direction is one way to maintain your goals. Having a financial goal such as paying off any debt you might have, saving towards a deposit on your bond, travelling, studying, or paying off a car can make it possible.
Setting a target and automating your savings into notice or long-term savings accounts can help you stay focused. However, it is also important that you set a financial goal that will not put a strain on your finances.
It’s ideal to save 20% of your income to achieve your goal. However, it is also important to know what works for you even if it means reducing this percentage to 10-15%. The aim is to save consistently to tick your saving goal off the checklist.
Curb your spending
Treating yourself isn’t a crime. If you are planning to follow through with the 50/20/30 rule, you will find that 30% of this will go towards you treating yourself. However, it is important to know your limits. More so, when it comes to treating friends and family.
This can be used towards entertainment, food, upgrading your furniture, or gadgets. The trick is to set a number and stick to it no matter what, even if that means storing the rest of your cash into your emergency account.