Budget

People constantly scream from the rafters of social media, that they don’t have any money to save and invest at the end of each month, yet they have never taken the time to draw up a budget. The Liver! Let me point out the very obvious – how is it possible to know with certainty that you don’t have enough money to save, but you have no clue of what your expenses and incomes are?

The ex you avoid at all cost….

The reality is that a budget is like the ex you avoid at all cost. They are a reminder of past mistakes and empty promises. A mirror of all your negative spending habits and debts. The foundation for getting your S#@t together financially, lies in the creation of a budget. Yes, the dreaded and boring “B” word. The task of drawing up a budget may be doubting for most but the benefits will be worthwhile. It will help you to prioritize spending, to better spread your money over the month and to identify places where you can cut down. Without a budget you will keep digging your debt grave from month to month without putting anything away for a rainy day.

Why should you care?

Budgeting is the process of creating a plan to spend your money. This spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. It takes your fixed costs, variable costs and disposable income into account. Fixed costs may include rent/mortgage, car finance, insurance and school fees. While what you spend on a day-to-day basis forms part of your variable costs and includes petrol, clothing, data and entertainment. This is where you can initially start cutting down costs. Disposable income is what is left once you have paid all your fixed costs. Scanning your 3-month bank statement can help you to identify these costs initially.

Get started….

There are various ways that you can go about drawing up a budget. You can remain in the stone age by writing the budget down or creating an excel spreadsheet. The other option is to use a variety of awesome money-management online tools that will help you to budget and track your spending, thereby reducing the admin. 22 seven is one such tool. It’s a free budgeting and investing app that automatically collates all your bank accounts and sorts your spending into categories. Making it easier to see where you are overspending and can potentially cut down. This entire process will take time and total commitment.

So what’s the big fuss?

So, what is the point of the dreaded “B” word? The point is that you need to be more conscious of where your money goes and how you spend it. You need to start seeing your money differently while making it work for you. It’s your spending habits that are a determinant of your financial wellbeing, not your salary. You have to ensure that your income is greater than your
costs, leaving you with a positive balance. You can then use that positive balance to pay off your debt, save, invest and live a little.

To be more conscious of your spending habits, you have to create a budget. There is no quick fix to getting your S#@t together financially!