Are you making the most of your money?

This week Maya Fisher-French shares the experiences of the Money Makeover contestants as they embark on the task to get a handle on where their money goes each month.

During a press conference on this year’s national budget, Finance Minister Tito Mboweni said it was time to “eat pilchards, not rump steak”.

Like government finances, most South African households are feeling the pinch as salaries have not kept up with inflation and debt repayments make up an increasing amount of our take-home pay.

For our contestants, finding that extra money to pay off debt or to start investing is going to take discipline and commitment.

Their first challenge was to get a handle on where their money goes each month and to make some decisions about what they were prepared to live without in order to reach their personal goals.

Know how much you spend

Taking a good hard look at your budget is not always an easy thing to do. For consultant Peter it came as a major shock when he did.

“I knew we were overspending but I didn’t know how close we were to completely running out of money,” admits Peter.

Although Peter and his wife Helen knew things were tight after his salary decreased, they didn’t have the courage to face the truth.

“We put on blinkers and thought it would turn out okay. We did cut back, but the money going out was still a whole lot more [than money coming in].”

READ: This is who the 2020 Money Makeover contestants are 

Now that they have a handle on the numbers, they can start to make informed decisions.

Construction company owner Bellah had no personal budget and would just spend as the money came in from customers. Now she knows exactly what monthly salary she needs to draw from her business.

“When I got paid I used it for anything, even things I don’t need. Now I am sticking to a budget and using the extra money to pay back my loans.

“With my next lump sum, I am going to pay for my life cover for the whole year and start an emergency fund so I don’t borrow money again,” says Bellah.

Create awareness

The power of tracking your spending is the awareness it creates. Simply by tracking his spending, government communicator Mishack has already saved R600 a month.

“I saved this by simply watching what I spent on unnecessary things. I saved more than R600 in January and last month. I will save again this month. I’m using this amount to pay off debt,” he says.

By tracking his expenses, Mishack noticed that when he went to pay his clothing accounts, he ended up spending more money in the store. At the shopping mall he would buy his family lunch and often bought more items on the store card.

His Absa adviser Johan Frouws helped Mishack set up his store card repayments through online banking. This is saving Mishack not only money but also time.

TV producer Nono has been amazed at how her finances have improved in just two months because she finally has a budget.

“I haven’t had a raise or any extra money but already I am paying off more debt because I am using my money in clever ways. It’s mind-boggling how that happened.”

Peter and his wife Helen with their three children have found sticking to a budget is much easier because it's a family effort. Picture: Leon Sadiki

Make it a team effort

It is tough on a family to have to cut back significantly. So Peter and Helen have made it a team effort and are sharing their experience with their three children.

“Our children are fully on board and they were especially excited when the photographers arrived,” he says.

For personal assistant and mother of three Catherien, budgeting as a family has been a challenge.

She is the budgeter in her family and updates their finances every Sunday evening. But her husband Jan finds it difficult and will buy items that are not planned.

Getting your finances in order requires a team effort, but it is worth it as you look forward to your future together.

Nono says sharing the experience with her husband has brought the newlyweds even closer.

“This forced us to have the real conversations about money that we didn’t even know we needed to have. Now we have conversations about investments and saving for the future. It gets us excited ... this is a new part of our relationship,” says Nono.

Catherien and her husband Jan have made their children a part of the budgeting process. Picture: Leon Sadiki

Get utility bills under control

The first step in budgeting for area manager and property owner Colen was to separate his personal finances from his business. What shocked him the most was the high electricity bills – not only on his rented properties but also for his home.

He has now installed a prepaid meter and his electricity bill at home has dropped from R8 000 to R3 000.

Colen is also investigating replacing his electric geyser with a solar one to cut his bills further.

Nono and her husband are closer after embracing budgeting. Picture: Leon Sadiki

Think out the box

Peter’s family had already cut back, but they needed to find even more ways to save. Reducing their grocery bill has been a key focus. They did this by eating less red meat and growing their own vegetables, although Peter admits that lettuce and spinach seem to be the only successes so far. They are also looking at selling unused items.

They are seriously considering selling one of their cars to cut down on car finance, petrol and insurance costs. As they live in a tourist spot in Cape Town, they plan to rent out their home through Airbnb during the December holidays to earn extra cash.

Work those rewards

Adviser Frouws identified opportunities for Mishack to save money via his Absa rewards cash back programme.

“Currently Mishack is on tier level two, but just by adding products such as an Absa will, marketing consent and loading a debit order for R250 savings a month he can improve his tier level to level 4.” This will give Mishack 6.5% cash back on fuel spend at Sasol garages and 6.25% on groceries.

For example, if he swipes his credit card for purchases of R5 000 per month, Mishack could get R250 more cash in his pocket.