Last year was a rough year for the South African economy, with the rand weakening to historic lows against the dollar and the downgrading of SA’s credit rating to just one level above junk.
Worsened by the effects of a drought, the country’s economic woes have translated into climbing costs all round. With a tough road ahead, spending less than you make is likely to require some serious attention to budgeting.
The basics of budgeting are to determine your monthly income and track your expenditure. It doesn’t matter whether you use sophisticated software or a pencil and paper to do this. Keep all your receipts and make a note of every single expense.
Once you’ve done this, you’re in a position to draw up a budget. To do this, you need to:
- calculate how much money you have to pay towards your bills each month, including rent, car repayments, insurance, electricity, water and any other fixed expenses
- work out how much money you’ll have left to spend (your “disposable income”), by subtracting your expenses from what you earn
- divvy up your disposable income, allocating an amount to groceries, toiletries, petrol/travel costs and any other foreseeable expenses (ideally, also allocate some income to savings).
If you’re unsure how much money to allocate to savings, necessities and sundry expenses, a recommended approach is the 50/20/30 plan. With this budgeting scheme, 50 percent of your income goes to necessities, 20 percent to long-term savings, and 30 percent to lifestyle expenses.
Top budgeting tips
If you’re overspending, use these tips to help gain control of your finances.
Do away with credit cards
If you have a habit of overspending and accumulating debt, do away with credit cards and store cards and opt instead for a debit card, so that you can’t spend more than you have in your account. This may seem inconvenient now, but in the long run it will help you curb your spending.
Consider putting a percentage of your pay cheque into a savings account as soon as you get paid, rather than hoping that the money will be left over at the end of the month.
Increase your income
If you’re struggling to get by on your current income, try to find ways to earn some extra cash. Pick up a part-time job, sell something you no longer need, teach a skill for money or find some freelance work.
Lose the luxuries
It may be hard to hear, but most people can cut out, or cut back on, luxuries to save money. Sometimes you can do this without affecting your quality of life one bit – aim to keep what really makes you happy, and lose the other, unnecessary extravagances (yet another takeaway, for example). People also often overspend on clothing, gadgets and entertainment.
Purchase with purpose
Write a shopping list before you go to the supermarket, and stick to it to prevent impulsive buys. You can also save on shopping by looking for specials, buying in bulk, opting for cheaper brands and always shopping around (including online) for the best prices.
Pay with plastic
Pay with plastic (ensuring you use a debit card from a provider that offers free card payments), and have a bank statement mailed to you regularly, or check your statement online, to monitor your spending habits.
If you need cash to tide you over
If you need fast access to cash, you can consider using a valuable asset you own – from a luxury watch or antique to a paid-up vehicle – to secure a loan with Lamna. Once you’ve repaid the loan, the asset will be returned to you. The process is quick, efficient and confidential.
Client borrows R10,000 for 90 days.
Total Cost of Loan
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.