Now that Finance Minister Pravin Gordhan has given his National Budget Speech and you are aware of the petrol and road accident fund levy increase totaling 39 cents per litre, increased taxes and the new sugar tax are you ready to manage your own budget in 2017?
When working with a personal budget, the most important question to ask yourself is “Why?”. Think about what is important for your own personal financial wellbeing. “Whether you wish to cut costs to stay within your means, get rid of debt, change your spending habits, save more money or invest, setting clear goals specific to your own personal financial status and needs is the first step to effective budgeting,” says Derek Wilson, Head of online insurance and financial services comparison website, Hippo.co.za.
Base your budget on your gross monthly income minus all taxes, company contributions such as Medical Aid, Life Insurance, pension fund, UIF, and any other deductible fees such as company training/skills development fees or any memberships. Exclude these costs from your expenses unless you are paying for it yourself and not through your employer/business. Use only your nett salary amount in your budget.
The next step is to remove the devil from the detail. Analyse your full bank statements for the past three months in order to identify trends in your spending habits. The first step would be to separate the necessary items from the “nice-to-haves”. Once you have listed the necessary expenses, focus your attention on the rest of your expenses to determine where you can eliminate or cut costs. Remember to include important costs such as school fees, vehicle license renewals and car services.
“For items such as Car Insurance, Home Insurance, Life Insurance, Funeral Cover, and Medical Aid, go online to compare from various service providers to ensure you are paying the best price for your needs,” says Wilson, “You could decrease these financial line items on your budget sheet and possibly save hundreds of Rands per month* if you compare online at Hippo.co.za”.
“If you haven’t already, start planning your budget for the rest of 2017 immediately,” concludes Wilson, “You can do so by keeping a budget journal and physically writing it down every month before you receive your salary, or you can download a free personal budget planner from the Internet”.