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Budgeting is a simple enough concept: it’s about knowing what you earn and how much you spend. Yet, it’s something that makes most of us break out in a cold sweat. South Africans are among the world’s worst savers*, generally spending more than what we are earning. Why are we so averse to budgeting? Let’s break it down and look at ways to become a budgeting pro.

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Why we run circles around the ‘b’ word - and how to learn to love it

There are a lot of factors at play in why so many families don’t have a budget, according to Trurman Zuma, Sanlam’s head of savings:

It’s boring: Sticking to a budget is pretty much saying no to going out, no to nice things, no to fun. Right? Wrong. A budget is not there to spoil life for you. It’s a practical tool to get to your goals and a way to have a long-term view on your finances.

Tip: Boring now can be extremely enjoyable later. Keep your goals visible by writing them down or make it come to life – for example putting the money you save away in a separate account so you can watch it grow. When you reach certain goals, celebrate them by transferring lump sums into an investment account.

Not enough time: When you work long hours or treasure time with family, the last thing you feel like is sifting through bills or scrutinising your bank statements. However, if you spend 30 minutes changing phone providers, you can save thousands of rands over a year, which is definitely worth your time.

Tip: There are lots of free budgeting apps that will automatically record all your spending. Instead of browsing Facebook during idle moments, go over your expenses for the day instead.

I-want-it-I-want-it-now: We live in a world of instant gratification and easy access to credit. It’s very tempting to get locked into a smartphone upgrade or store card that is ‘just’ this much per month. It’s much harder to say ‘no’ or rather save the money.

Tip: Purchases have an immediate reward, releasing our happy hormones. Set yourself achievable goals (e.g. no more daily cappuccino’s or try packing lunches for a month) and you might enjoy these accomplishments just as much.

“Boring now can be extremely enjoyable later. Keep your goals visible by writing them down or make it come to life.” – Trurman Zuma

Ignorance is bliss: We’re afraid that when we start to budget we’ll get a big shock and realise just how far outside our means we’ve been living. It’s easier to keep our heads in the sand than facing just how in the red we are.

Tip: While this feeling is understandable, it’s not going to get you anywhere, and falling further into debt will catch up with you. Rather face the facts now and let a professional help you get back in control. It might not be as bad as you think.

The bottom line: People tend to focus on the top number – their earnings – rather than the bottom, which is what’s left after expenses are covered. So when they get a raise, they feel they can spend more immediately.

Tip: Every time you get a raise or unearth extra income, allocate the majority of that to the settling of your debt, your savings or retirement.

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Getting back on track

Ready to lose the excuses? Here’s how to stick to your budget:

Draw up a realistic budget: Be super honest about every single expense and see where you can cut down. Use those savings to settle debt first, only spending money on must-haves.

Cash is king: Beware of the plastic (store and credit cards) as well as payment apps. All too often, this ‘invisible money’ tricks you into spending more than you should. Set a budget for the week, withdraw the cash and steer clear of cards as much as possible.

Share the load: If you’re in a relationship, book time with your loved one to create a budget together that you both agree on, or make a pact with friends to all stick to your monthly budgets.

Add a ‘just for fun’ item in your budget: This lets you treat yourself spontaneously each month so you don’t feel too restricted.

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Ready to conquer budgeting? Let celebrity comedian Tumi Morake take you through the 6 steps of budgeting with interactive tutorials and get more advice on our Budget Week campaign page.

*Financial Services Board

Want to bring out the WealthsmithTM in you? Call us on 0860 22 33 90 or find your closest BlueStar adviser.

 

 

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