10 Practical tips to spring clean your budget

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SOUTH African consumers need to dig deeper into their pockets every month with increasing fuel costs, increasing energy costs and the increase in general costs of living. Add to this the immense pressure of servicing debt and it becomes evident that smart budgeting is crucial, says Budget Insurance.

The price of petrol rose by 67 cents a litre and diesel by 44 cents a litre this week. Electricity tariffs are set to increase by more than 20 percent. In addition, preliminary statistics from Stats SA released on  August 17, reveal that many South African consumers are under a tremendous amount of debt-related pressure, with 48 169 civil summonses issued for debt in June alone, to the value of more than R350 million.

So, before you get out the mops and feather dusters and get stuck in, start with a spring clean of your budget.

“If you haven’t looked at your budget in a while, then now is definitely the time,” comments Susan Steward, Marketing Manager of Budget Insurance. “Changes in both the economy and your personal life affect your budget, which is why it should be revisited on a regular basis.”

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To help you kick start your budget spring clean, Budget recommends asking yourself these 10 questions.

  • Have your income and expenses changed?

When annual increase time comes around, you may have a little more in your bank account each month. Think about how best to make use of this extra money. The rest of the questions below should help spark some ideas:

  •  Have you been slack in paying off your debt?

Between credit cards and store cards, it’s easy to get caught up in buying on credit and forget about all the amounts you’re racking up along the way. So make sure to go through all your statements and pay off outstanding debts or at least put a plan in place to do so

  •  Are you cutting corners where you shouldn’t be?

We all know which costs are most likely to get the cut when it comes to budgeting and one of them is insurance. The question however isn’t whether you can afford to be insured, it’s can you afford not to be. Without the right cover you could be in a far worse-off financial position if, for example, your car is written off or your house is robbed. Insurers are continually looking at ways to offer consumers competitive premiums.

  • Are you willing to compromise and reprioritise?

You love that expensive perfume, you really want those new designer sneakers, you can’t live without the pricey steak once a week but when you’re feeling the squeeze at mid-month, you may find yourself regretting those lavish purchases. The last thing you want is to be in a position where you have to compromise on the important things like family healthcare or your kids’ education. So instead, compromise – find a more affordable fragrance, do without the sneakers and have that steak once a month.

  • Have you been sticking to your saving goals?

There are many ways to help break the bad habit of not saving that will force you to save every month. This includes things like setting up a monthly debit order to an investment account, opening a tax-free savings account, increasing your pension fund contribution and requesting the 13th cheque option from your employer.

  • Do you save for emergencies?

What if you were in a situation where you needed money urgently, like if you were laid off at work or your car needed major repairs – where would get the cash from and how quickly could you get it? It’s not something pleasant to think about but it’s vital to have that safety net in place. The amount you save towards an emergency fund depends on your personal circumstances, but ideally an emergency fund should cover three to six months’ living expenses. This might seem like an impossible sum to save, but just by putting aside R250 a week, for example, you have R1,000 in a month.

  • Do you track your spending?

This isn’t about scrutinising every cent you spend but rather establishing spending patterns to identify possible areas for saving. A good way to do this is to look at your monthly bank statement and see where most of money is going. You may be surprised at just how much you’re spending in certain areas and how by making small changes you could keep your spending in check.

  • Are you paying unnecessary and outdated fees?

You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. This is wasted money that could be going towards saving or paying off debt.

  • Are your rewards programmes actually benefiting you?

Many stores and service providers offer rewards programmes but not all are created equally and not all are beneficial to everyone. While it’s tempting to join every loyalty programme on offer beware that you may be overspending just to get something small in return. And of course, always read the terms and conditions carefully before signing up for rewards programmes as there may be hidden costs involved.

  • Are you empowering yourself with financial knowledge?

These days you can find the answers to almost any question on the Internet. How to save? Where should I investment my money? Why should I have a pension fund? This is great for understanding the basics but always consult with a financial advisor before making decisions around saving, spending and investing.

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  AUTHOR
South Coast Herald

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