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The way we see it, it’s so much easier to tell other people what to do with their money, than it is to manage your own.

Take one couple. Not just any couple. Take Theo and Jules. Then make that couple swap budgets for a month, and see what happens.

We all have a different approach to managing our money. And two people could not be more different than Theo and Jules. Theo takes a work hard, play even harder approach to the cash that lands in his account every month, while Jules thinks she is more frugal.

Theo and Jules have never discussed how they budget before. But they’re getting married soon, so they know they have to get on the same page financially. More couples fight over money than any other issue, and they don’t want to become a statistic. Which is why they agreed to take part in our Big Budget Swap.

Here’s what we learnt:

Theo and Jules thought their money habits were very different, but at the end of the month, they could see they were more similar than they expected. They had both made the same budgeting mistakes, and truth be told, it’s the same mistakes most of us make.

Theo and Jules made the same budgeting mistakes, truth be told, it’s the same mistakes most of us make.

Meet The Couple

Theo – 34, Product manager at an online property website.

I am pretty good at budgeting, the big "life responsibilities" – bond, car, food, and medical aid – are all covered every month. The rest sits in my bank account and dwindles down unnoticeably until the end of the month when there is nothing left.

Jules – 30, Teacher

On paper, I’m a good budgeter. In the real world, I spend money without realising it. Debit orders get paid every month. The rest just evaporates.

Like most of us, Theo and Jules budget perfectly for the big living expenses. They even have debit orders in place, so those are taken care of. But the problem is that they don’t keep track of the rest – the disposable income. They also don’t budget for the small things, which is why they often spend more than they realise. It’s these little unaccounted-for expenses, or small luxuries, that make our money ‘evaporate’ by the end of the month. And because we live in a world where credit is so readily available, it’s become easy to spend more than we have.

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Here are 3 ways to avoid making the same mistakes they made:

  1. Pay yourself first
    • Instead of saving what’s left over at the end of the month, rather save upfront, then you can spend the rest. By getting money out of your current account and into savings first, you’re less likely to spend your savings during the month, which means you’re guaranteed to come out with something saved, even if the month has been a tight one. You can’t just spend and then say at the end of the month “This is what I’ve got left, let me save that”, saving is not going to work that way.
  2. Use the 3-Category Budget
    • To achieve a budgeting goal, sometimes you don’t need to track every rand you spend, that just makes the budgeting exercise more complex and difficult to stick to. For example, knowing how much you’ve spent on petrol may be interesting, but if it doesn’t change your behaviour there’s no point in tracking it. Most people overspend in just a few categories, for example: eating out, entertainment, buying clothes and gadgets.
    • Simply track your spending for a couple of months, then pick the three budget categories you’d like to get under control. Then all you have to do is monitor your spending in those three areas. The 3-Category Budget is easy to do and can make a huge difference.
    • Here’s a tip: finding things you won’t miss as much is a good way to ensure you stick to it. If it’s a massive sacrifice, you will find it harder to give up.
  3. Find physical ways to control psychological behaviours
    Trick yourself into changing your spending behaviour. Here are three ways to do this:
    1. Withdraw your weekly spending budget and then be strict about only spending that and not a cent more.
    2. Open a savings account attached to your current account so that you can physically remove the amount you want to save from everyday access.
    3. Use credit cards for big purchases only, and don’t keep them in your wallet. That way you’ll have to think about a big purchase before you make it. If you do make the purchase, move the funds from your current account to your credit card account within 24 hours.
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So how did it all turn out?

The swap according to Theo:.

The swap according to Theo: “It’s only when someone else takes control of your spending that you realise how much of it is just a habit. Although I complained about almost every change, it really didn’t impact my lifestyle or happiness that much and meant that I had money available for longer-term things.

The swap according to Jules:

The swap according to Jules: “It’s amazing how all the little savings add up in a budget. On a day-to-day basis you don’t think small changes do much, but it really does add up. I think everyone needs to stop and step back for a clearer view of their finances once in a while.

The bottom line:

Theo and Jules thought their money habits were very different, but at the end of the month, they could see they were more similar than they expected. They had both made the same budgeting mistakes, and truth be told, it’s the same mistakes most of us make.

If you need help creating your own budget, contact a Sanlam adviser on 0860223390, or visit Bluestar to find an adviser near you.

 

 

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