10 Budgeting tips

This spending plan allows the consumer to determine in advance whether they will have enough money to do the things they need to do or would like to do. People often don’t realise that they spend more than they earn. To cover for the short fall they use short-term debt and slowly, they sink deep into debt every month.

Since very few people feel they have enough money to do everything they would like to do, budgeting helps with prioritising spending so that the focus is on the things that are most important. The budgeting process is an effective way of separating needs from wants. Following a budget or spending plan keeps consumers out of debt or help them work their way out of debt if they are currently in debt as many South Africans are.

Here are some do’s and don’ts of budgeting:

  1. DON’T: Take financial advice from just anyone. Your friends and family may provide you with well-intentioned financial advice — but that doesn’t make it good advice. It is best to seek the help of a qualified financial adviser.
  2. DON’T: Fall for the misconception that you will start budgeting when you have enough money.
  3. DON’T: Spend more than you earn. This is the #1 budget buster!
  4. DON’T: Forget to plan for unexpected events and emergencies.
  5. DON’T: Borrow money to use for day to day expense.
  6. DO: Understand needs from wants.
  7. DO: Make a list of all your expenses separating them into fixed and variable expenses.
  8. DO: Set financial goals and feel confident in your ability to reach them. Achieving financial success doesn’t happen overnight. Accomplishing your financial goals requires determination, dedication and confidence.
  9. DO: Budget for savings directly. Most people omit “savings�? from their budget, erroneously assuming they “can’t afford�? to save, or that there’s simply not any money in the budget to save. But this is a big financial mistake!
  10. DO: Reward yourself for good financial behaviour.

Read more about the cost of small things