NEED A BUDGET
Henry van Deventer, acsis financial planning coach, has this advice about budgeting:
Although we all mean to do the right financial things, many of us never draw up a personal budget for two main reasons: we fail to see why it's important and we wither in the face of the admin involved.
So let's look at the budgeting more closely by walking through a quick 10-minute budget.
To prep, you will need to go into your internet banking account or grab a bank statement. Place a blank to-do list next to it.
Drawing up a basic budget works like this: take your bank statement and see what your net monthly income is.
From this, the first thing we do is deduct our fixed monthly expenses, which will probably be paid by debit orders.
This will be made up of items like your bond repayments or rent, levies, car repayments, municipal accounts, phone bills, insurances, gym memberships and medical aid contributions.
If this becomes a very long list, note the items that are not essential needs.
On your to-do list, note action one as stopping these expenses.
If a sizeable portion of your fixed expenses is going towards insurance (both short-term and life insurance), note action two on your to-do list as "review insurance".
For short-term insurance this can be done by phone.
For long-term insurance, seeing if you can rather increase your group life cover (if you have it through your employer) should be a bit cheaper. You will need to see a properly qualified financial adviser for guidance on this.
Locusts or fat clowns
The next area to look at is your variable expenses (largely made up by the credit card gap).
This is where the wheels come off for most of us. Items like petrol, clothing, groceries, cash withdrawals and rest and recreation items are like locusts, or fat clowns.
A bit scary and prone to devour whatever they can.
This is where you can make the most radical difference to your wealth building strategy. Look at the items on your monthly bill and see which of them are need-driven and which are want-driven. See what the need-driven items cost you.
Make a third note on your to do list to find cheaper ways to meet the needs. Buying in bulk, going to different shops, paying in advance or joining a lift club are examples of what can be done to accomplish this.
It can't be all work and no play, though. Consider taking whatever you manage to save and spending that on your "wants". If you can afford to, you can set aside a further small amount for one other "want" pe month.
Now add up the total variable expenses and pay this into your credit card account every month as soon as your salary lands. Whatever is left, must be saved. Because we are weak and mortal, put a debit-order in place to make sure that your savings happen as they should.
Add this to your to do list.
As a guideline, your savings should come to about 20% of your net salary. If you are a member of a retirement fund, remember to take this into account. If you're not close to the 20% mark, go back to your budget. Odds are that your debt is eating up most of your savings cap
Talk to your banker about what you can do about this. If this fails, fight the urge to upgrade your car or house when the next cycle comes around. Note this on your to do list.
If you can save more by following the above steps, the reward is simple. You will become financially independent earlier and will be able to start living the kind of life you want to live. This is what real freedom is all about.
•acsis is an independent financial services group