Do you often find yourself wondering where your money went this month? Are you unsure what you spent it on?
Well, you are probably not the only one. As the Covid-19 pandemic has hammered the world economy, South Africa’s biggest debt counsellor, Debt Busters, recently reported a 40 per cent spike in people asking about its services.
According to fintech platform PayCurve, four out of five South Africans are seeking expensive, unsecured loans to make ends meet every month.
Today we are going to look at some tips to help you become penny-wise and increase your savings:
Save first, spend later
Many of us have fallen into the trap of thinking we are going to save what we have left at the end of the month, only to find that we have spent it all when the calendar turns.
If you save first, you are committing to putting aside a certain amount every month, because out of sight is out of mind.
There are several ways you can do this, but the recommended route is by transferring this money into another bank account to remove the temptation of spending it.
Track what you are spending first
Start out small. For some, committing to a budget where you allocate your money to different things such as food, cellphone, travel, etc. might be too much.
When you hit the first monetary hurdle which derails your beautiful plans, you might become penny wise and pound foolish.
Keep all your receipts to see where your money is going and then plan accordingly. If you see you are spending too much on takeaways, you can cut down on them and rather save some money instead.
Once you know where your money goes consider sticking to a comprehensive budget.
A budget is not a licence to spend money
Despite your game plan, every month will be different.
Sometimes you will be spending more than what you budgeted, because of unforeseen expenses such as repairs.
To make up for this, save the extra money during the months in which you spend less than what you budgeted. You never know when you might need it for a rainy day, so remember that just because you budgeted an amount for something every month, it doesn’t mean you have to spend that money if it is not necessary.
Be brutally honest about your needs versus wants
Sometimes we convince ourselves that we need to buy a new item, because we deem it essential when in truth it is merely something we desire.
A new pair of shoes is a good example. Unless your previous pair of shoes broke or you need it for work, you probably don’t need it to survive.
One way to save more is to examine how much of our money is spent on needs, items you need to survive such as food, versus what we desire.
Take a hard look at what you want and need the next time you walk into a store.