Posted by Standard Bank Namibia on 09 Feb 18
A lot of us keep our budgets in our heads. Your internal dialogue may be something like: "The car costs this, the mortgage that, insurance works out to about this amount, which leaves me plenty for shopping!". Unfortunately, this laissez-faire approach is often misleading. When you really examine your expenses, especially the stuff your brain chooses to forget about, you'll be amazed at how much money dissapears every month.
So why not get a handle on the coming and going of your cash by using the following basics to create a budget.
Where does your money go?
As you read this article, start a list. Be it on paper, your phone, an Excel spreadsheet... pause your reading and get ready to write. All set? Okay, start by listing your fixed expenses, the costs that rarely change, like your car, home, insurance policies, funeral plan, etc. To make sure you don't miss any out, get hold of a recent bank statement. It's important to remember that some of these expenses may experience an annual increase at this time of year, so make sure you've listed the updated amounts.
Next, check your flexible expenses. Your phone bill, electricity, petrol and so on. These can go up or down depending on your usage. Find the highest amount you've paid and write it down so that if you spend less, you know you'll have more to play with. Also, hunt around for the expenses hiding in your statement which aren't debited on the first of the month.
Add them all up to get to your total expenses and take a deep breath. The amount will probably be more than you expected!
How much cash is coming in?
You probably know this figure very well, as most of us count the minutes till payday. Write down the figure you receive after tax and other deductions. Do you get any other income? Maybe you have tenants renting a flat, or you get a bit of pension? Does your spouse's income get included? Write it all down, total it up and deduct your total expenses.
What you have left is your disposable income. If you don't have any disposable income, it's time to make some changes right away. But don't panic. There's always a way out. Get rid of debt, ease back on shopping, ask for a raise - your expenses and income list will help you identify your problem areas and make your plan of action that much clearer.
If you do have disposable income, well done! But you can always have more, especially for life's little surprises. So look carefully and critically at what can be tightened.
Put aside some fun money
You will probably like to enjoy yourself every now and then. Goodness knows you deserve it. So make sure your budget has some flexibility for the weekend braai or Sunday lunch out with the family.
Spend on Yourself
Think of saving as paying yourself a salary, Everything you set aside is going towards a good cause - you and your family! It's certainly not a chore, and is instead the most important step you can make to ensure you have the best year possible.
For more assistance on budgeting please visit www.standardbank.com.na