10 Ways to Clean Up Your Budget this Financial February
The time has come for businesses around South Africa to take a look at their finances and budget for the upcoming year. Take this opportunity to have a look at what and where you’re spending, and plan ahead by crafting your own financial plan.
If you’re serious about becoming a pro in financial management, check out our online short course in Financial Management Fundamentals.
For those simply wanting to finesse their personal finances, here are 10 easy ways to draw up a killer budget, make the right choices with your money, and enjoy more financial freedom than ever before.
1. Make a Budget
This is a pretty obvious first step. In order to adjust and monitor the way you spend, you have to have a plan. In the most basic terms, a budget is an account of your funds and a strategy for where you intend to use them. This will not only structure the way forward, but it will also give you control over your money and allow you to achieve your financial goals.
2. Track Your Spending
The first step in drawing up a budget is going over your past finances to figure out where you are spending money and if there are any changes that you could make. It is a good idea to keep all of your receipts for a month and use that as a starting point. Once you have got a budget, make sure to note every transaction diligently so that you can get an accurate picture of your habits.
3. Get a Helping Hand
There are numerous apps on the market that can help you design a bulletproof budget. Most of them even link to your bank accounts, and some automatically categorise your spending so that you can get a clear idea of where your money is going. Not only does it simplify the process, but it cuts down the work so that you can track your money without the hassle.
Check out these awesome options.
4. Write Out Financial Goals
It’s really important that you know what outcomes you would like to achieve before you decide on your final budget.
You may want to go on holiday or save up for a car or buy some stocks – whatever your goals, make sure that they are clearly defined and that you are using your budget to work towards them.
5. Factor Savings into Your Budget
It’s no good planning your spending if you don’t allocate some money to go into your savings. Even if you are not saving up for something at the moment, it’s a good idea to put some money aside each month in case of an emergency, or in the event that one day you decide that you would like to make a big purchase.
6. Get an Accountability Buddy
Even if you have drawn up a thorough and effective budget, it can be difficult to stick to it if you are only answering to yourself. The temptation to spend a little extra on eating out or going away for the weekend is often really hard to resist. It will really make a difference if you pick a friend or family member to keep you in check.
7. Use Cash
There is a strategy known as envelope budgeting, where you withdraw and set aside cash for problem categories. For example, if you often overspend on groceries then you can decide on a set amount that you are allowed to spend for the week or month. Once the cash in that envelope has been used up, you’re not allowed to spend any more on groceries.
It’s almost too easy to just swipe and spend, so limiting yourself to cash might help to curb those spontaneous splurges.
8. Needs vs Wants
We often have trouble distinguishing between our needs and our wants. In the moment, you may think that spending some extra money on yourself will be good for your mental health, but often it just makes for stress and disappointment down the line. Your basic needs are food, clothing, shelter, and some social activities – your wants are fast food, expensive clothing, pricey accommodation or décor and a party every week. Take a good look at yourself and what you do and don’t need, and let that guide your spending.
9. Eat at Home
This point is particularly close to my heart because I have a near addiction to Uber Eats, but I know that it cost me way too much – especially considering I have shelves of veggies in the fridge that are expiring. The taste and convenience of take-out food are difficult to resist, but you will save so much money if you stick to buying reasonably priced groceries and then actually eating them. Plus, you’ll probably be eating healthier! If you are going out to eat with friends, you can always eat a little bit at home first so that you won’t have to pay for a big dish at a restaurant.
10. Make Long-Term Investments
This is probably the best thing that you can do for your budget and your long-term financial success because you are using money to make more money.
Savings are great, but they don’t usually end up generating more money. Using your money to set up lucrative financial strategies or expand your skillset is a great way to be smart with your budget.
One of the best ways to invest in yourself is to sign up for an online course. You will be receiving an education at an affordable price, and you will be setting yourself up for success.
MasterStart offers 11 different courses in business, finance, leadership and marketing, allowing you to have a better understanding of how money moves around and how you can achieve success.