Every year before I got serious with my finances, I would tell myself, ‘this is the year I stick to my budget’, then a friend would call me to go out for lunch that was not included in the budget, or my day would not be going well, so I would decide to console myself with a new pair of shoes; the list is endless of what can derail me from my budget! ‘Things’ just seemed to come up all the time!
Sounds familiar? You are not alone; many South Africans cannot stick to their budget, let alone have a budget!
So what does it take for one to stick to their budget? A big part of sticking to ones budget is awareness and being able to reflect on your WHY. “Why is sticking to a budget important to me?” “What will it mean for my finances if I do stick to a budget?” “What impact will sticking to my budget have on my finances and overall life?”
It is firstly being able to answer these questions that will bring you to your awareness of how you spend your money and why.
- You have to write down your budget
You actually have to put pen to paper (or at least use an excel spreadsheet), you cannot say that you have a budget if it’s just a mental note of your expenses.
Little expenses easily fall through the cracks if you don’t write them down.
You know that saying: A small leak can sink a ship? Yep, it’s true. A little coffee here, eating out here and there and boom! Your budget is blown off.
Write down your income at the top then start listing all your expenses, debt repayments and savings. Subtract the expenses, debt repayments and savings from your income.
If you have a positive number at the end, it means that you are living within your means. If you have a negative number at the end, it means you are living beyond your means. This means that you are more prone to use debt to fund the shortfall.
- Track your spending
Your budget is not something you do once-off, it is an interaction with your money every day. Get into the habit of writing down all your expenditure for the day. If you do not have the time, always reconcile the week’s expenditure on the weekend.
I had a client tell me once that she reconciles her expenditure for the week on Friday before she leaves work, she says this not only helped her keep up with what’s happening with her money but the biggest advantage was because now she was more conscious of what she spends, she ended up avoiding the weekend wastage of eating out and letting her emotions get the best of her.
- Give yourself an allowance
The biggest mistake I often see even with people who say they do budget is that they do not allocate themselves some #funmoney. Giving yourself an allowance makes your budget a living and breathing tool that is part of your life as someone who not only has needs but wants. The key to giving yourself an allowance is that, once you allocate funds towards your whims, do not spend more than you have allocated. For this, you can use the envelope method of budgeting. With the envelope method, you draw your #funmoney allowance in cash, put it in an envelope somewhere safe, each time you want to buy something for yourself, you take from the envelope. Once the money runs out, you know not to spend a cent more towards your luxuries like eating out, coffee etc.
- Stick to your grocery list
The ever-elusive grocery bill! I must admit, I still have months where my grocery bill gets completely out of hand. I have tried to shop once a month for non-perishables and get fruits weekly etc and I have also tried to do my family’s groceries once a week – both methods are not without their challenges, especially time constraints, but one thing that works every time and ensures that I stick to my budget is making a grocery list. Having a grocery list eliminates you buying things you don’t need. Have a small notepad where you write the items that run out so that once you do go shopping, you don’t forget some things.
Budgeting at the end of the day, helps you track your spending and gives you a good view of what your financial priorities are.
**This article first appeared in City Press Money Makeover
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