Research has found that South Africans spend 32.55% of their budget on housing and utilities. Another finding indicates that, on average, South African households spend more on recreation and culture than they do on education.
The process of finding a system one can easily and systematically follow takes time, but there is no better time than the present. A budget should accurately reflect your cost of living, so everyone’s requirements will be different.
It’s time to wake up and smell the prosperity, and the best way to kick-start a budget is with microsavings.
10 simple steps to follow for an effective and simple budget plan – after all, every bit helps.
- Create additional sources of income: Budgeting is not only about expenditure. Find ways to create extra sources of income and put what you earn into a high-interest-bearing bank account. Extra income quickly adds up and, left untouched in a separate account, can be invested wisely.
- Continually track spending: Even if spending varies from month to month, it is important to track spending to identify where you can save. Simple items such as coffee takeaways can easily add up to hundreds spent each month.
- Use apps to streamline your budget: New apps such as Stash will automatically take cents left over on your transactions and save them. Similar apps include Acorns and WiseBanyan for bank accounts abroad. The app 22Seven enables you to automate your budgeting process.
- Identify monthly payments and debit orders and know what they are for.
- Categorise your spending and identify variable expenses.
- Develop a plan that is realistic: Identify areas to save and stick to a set amount to add to savings. Coach.me is a habit-tracking platform that can help users stay on track.
- Determine expense categories to decrease spending and figure out how much money you can apply to each. For example, fast food can be replaced with fresh produce on a monthly or weekly basis.
- Create a monthly calendar with all incoming contributions: This includes your salary and will be combined with regular outgoing bills. Add holidays, special events and birthdays to help track additional spending.
- Create a debt payment plan and add this to the calendar. This will also help you track your progress.
- Add a network tracker to monitor progress over time in your overall budgeting plan.
Clausen is the author of Tips, Tricks and Checklists from a Tax Practitioner, which provides helpful checklists and insights to taxpayers who are preparing to submit their income tax returns in friendly non-accountant terminology that anyone can understand. The book is available from Amazon.com