You know you should be saving something every month, but how? Your monthly expenses use up all of your available income and then there’s that debt that needs paying off... and you still have to have some fun, right?
The truth is that once a budget is compiled (I mean it’s really easy to do — grab a piece of paper, list your income on the right and your expenses on the left , total them and see how much is left every month) you will have to face exactly what it is you’re working with. You will have to face your fear of either not earning enough or spending too much and you will have to change your habits.
In my experience, people only overhaul their budgets for three reasons:
Which one are you?
Let’s suppose that after ruthlessly assessing your budget you discover that there really is no extra cash to start a savings plan. You now know that you will have to either cut some expenses or earn more if you are serious about improving your financial wellbeing.
If you choose to cut your expenses, here are some tips:
We are all so spoilt and these luxuries are so hard to give up. This is where you need to assess what is important to you — luxury or security.
I prefer to earn more rather than spend less. Here are some tips:
(Click here for 44 ways to earn extra money.)
Just make sure that every extra rand earned is saved. Don’t make the mistake of spending more because you are earning more! Also, keep in mind that even if you only make a few hundred rand extra, it will make a big difference to your savings over time.
Controlling your financial affairs to free up cash in any of the given scenarios requires a budget. For many people, the word "budget" has a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a means to achieve the financial successes that you want (and the improved lifestyle that goes with it).
So, you now have a plan to free up some extra cash to save. The next article in this series will show you how to take baby steps in investing that extra cash effectively. You’ve worked hard to earn it and now it’s time that your cash works for you.