According to the latest PWC ‘Economic Outlook’ report released in February 2022, higher consumer price inflation could persist for the rest of the year which will see South African’s spending more in everyday products and services triggered by increasing fuel and food prices which will make it even harder to save.
The Covid-19 pandemic put a spotlight on access to disposable income and saving for unexpectant life events. While South Africans look to rebuild and make better financial decisions, unfortunately many do not know where to start.
Budgeting in its definition simply means a process of creating a plan to spend your money. This spending plan allows one to balance their expenses and their income to determine, in advance, whether one will have enough money to do the things they need to do or would like to do. Assupol’s Head of Group Corporate Affairs; Velmah Nzembela, lists these easy budgeting hacks to start where you are to reach your savings goals:
Create a system that works for you
There are many ways to budget, test out different budgeting methods that work for you. You can choose to track your expenses on a daily or weekly basis. You can also adopt a budgeting rule, for example: a 50/30/20 rule where 50% is spent on needs, 30% on wants, and 20% on savings.
Be honest with yourself
It is in human nature to entertain our immediate desires but being honest with yourself about what you can afford and what you need the most will help you in the long run.
You must clearly define and prioritise your needs to differentiate them from your wants. If you want something specific but can’t afford it in that moment , you can put small amounts of money away (monthly or weekly) until you are able to afford it in full.
Create an emergency fund
Life is unpredictable, it’s better to be prepared. When you work on your monthly expenses, spare an amount towards your emergency fund and make a commitment not to touch that fund unless you really need it.
Transparency with your family
When you are married or have young children, it is recommended that you share your budget/spending plan with your family. This helps with managing disappointments and working together as a family to achieve a financial goal that benefits all.
Nzembela concludes that the basic rule of budgeting and saving is having your priorities in check; revisit your budget often and see if it still works for you; and leave room for surprises because your budget can easily change due to unexpected life events – this is where your emergency fund comes in handy.
For more budgeting hacks, the public can download the financial education series on Assupol’s website www.assupol.co.za/financialliteracydramaseries or WhatsApp on 0726060173 for more tips.