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I moved recently and, while it was a truly exciting process and a representation of a new part of my life, it came with financial adjustments. As we grow and change, our budgets need to adapt with us. Often, our salaries stay the same – but our expenses change. Getting used to that can be quite difficult – especially if you’re used to living a certain way.
But as I said, it’s a part of life. As I had to do, your monthly budget will often need revisions. Now that I’ve got more expenses than I had before, some of the luxuries in my life have had to fall away. That’s a given. While the upcoming sentence may be common knowledge or obvious to you, there are many people my age who still don’t understand the importance of prioritising.
Yes, it’s wonderful to have a rich social life, filled with fine dinners and cocktails. We all enjoy going out, spending money and buying the desires of our hearts. But it’s important to remember that there are more important things that require your attention – things that are highlighted as you get older.
Aside from rent, groceries, electricity and other essentials, make sure that you have enough money over to pay yourself. What does this mean? Paying yourself simply means putting money away for your future. Understandably, in South Africa not many people are able to do this. If you are one of the lucky few that has some disposable income, ensure you’re investing it or saving towards something.
Priorities always take preference over wants and desires. However, that doesn’t mean that you should forego life’s pleasures. Whatever you may wish to do, budget for it and – if need be – save for it. An important part of trimming your budget is tracking your spending. We don’t realise that, through small (and frivolous) purchases, we often end up wasting unnecessary amounts of money. I’m guilty of this with to-go coffee, for example. Slowly, those R35’s start to add up to a significant amount of money.
I’m not suggesting for one minute that not buying coffee is going to solve all of your financial issues, but it will certainly make a difference to how much money is left over at the end of the month. Look where else you can trim fat from your budget – while no one likes to live like a penny pincher, clever money tricks (like reconsidering your subscriptions) can save you money too. Why pay nearly R1,000p/m on DSTV when you can have Netflix – and a host of other streaming services – for far less?
It’s also about looking at your circumstances. Since the advent of Covid-19, many of us have been relegated to our homes. What’s known as the traditional commute no longer exists for plenty of people. As a result, their cars sit in the driveway, not being used. Yet, they’re still paying the same amount of money for car insurance. Re-evaluating your expenses could see you saving a tidy amount at the end of each month.
Most important is to pay off your debt. Removing the burden of debt from monthly budget can free up so much space. You can use that money to do things you actually want to do.
It may be difficult, but try and set little challenges for yourself. Many personal finance experts have the idea of ‘no spend days.’ Simply, these are days in the week where you challenge yourself not to spend any money. It may take some getting used to, but living with extra expenses is possible with sacrifice and a budget facelift.
Have a question about share investing? Write to me at [email protected].
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