If you did a budget in January you might be wondering what has happened as nothing seems to be within budget anymore. You are not the only one! Potatoes alone have gone up 20% since December and other foods seem to be escalating at the same rapid rate.
An undervalued Rand, low commodity prices and a slow-down in the Chinese economy has not helped our struggling economy. Add to that political mayhem and the worst drought we have seen in decades, and South Africa is set to continue seeing high inflation and slow economic growth for the foreseeable future. But we have two choices—resist or adapt to the changes happening around us.
We are doing a Wealth Management series this year. In the first month we covered Your Goals, the first step to Wealth Management. Setting your goals keeps you focused on the target—what you are saving and working towards. The second step is setting Your Budget and the third is Aligning your Budget with your Goals. If you have not set your budget, I recommend you do. As a good friend said recently: “It is hard to see controlling of finances and better management as, actually, something we should do for ourselves. It is an empowering thing! I think we are so busy and stressed about money that most of us do not want to acknowledge how tight it is or that we have power in our own hands to do something about it. We forget it is for own stability and peace of mind, that more control could bring about calmness rather than chaos, and stability and better living long term – for things we really want to do or achieve. We should be treating our finances on the same level that we are concerned about our health and fitness, and working towards the milestones and achieving them.” Well said Tracey!
The third part of Wealth Management is: setting the budget and aligning it with our goals. This is about concerning ourselves enough with the Rands and Cents we spend to ensure that, long-term, we achieve the financial goals we have set out. It is marrying the goals we have set and our actual spending. It is working towards our spending reflecting our mission in life. It is also adapting to a changing economic environment and staying within our budget in hard economic times. It is still trying to reduce our expenses so we are able to save more and stick to our budget, even though it might seem impossible at times, so we can achieve the financial goals we have set out to achieve and spend our money where we actually want to spend it.
But Rome was not built in a day and staying within budget is not an easy feat. Below are some pointers that I have found useful in sticking and staying within budget. Please email me any pointers that you may have found useful or that I might have left out.
1. Electricity bill: If you have not visited the numerous “how to cut down on your electricity bill” websites and blogs, I suggest you do. There are so many simple and easy things we can do to reduce our electricity bill.
2. Water bill: The cost of water has increased, which is understandable given the drought, but the sewerage bill is linked to your water bill so, if one goes up, so does the other. I watched this humorous yet insightful clip of Suzelle and Helen Zille chatting about how to be water wise. You can watch it here: https://www.youtube.com/watch?v=D49ahC1JAUg&noredirect=1
3. Grocery bill: I guess all I can say is plan, plan and plan. Draw up a list and stick to it; buy only local seasonal fresh fruit and vegetables; and try eating vegetarian once or twice a week to reduce costs. I have also found that buying online offers fewer “temptations” as you stick to your list and are not tempted into buying non-essential items. Most retailers deliver within a day or two of ordering.
If you are not a planner, you might like the Daily Dish. They deliver the ingredients and recipes for dinner for four nights a week for either two or four people. You can choose between classic, no carb and vegetarian. The advantage is that your costs are capped for four of the seven nights, and no more wondering what to cook for dinner or popping into the shop for a can of tomatoes for your spaghetti bolognaise.
4. Clothing: What might help to cut expenses here is committing to only buying on sale and what is absolutely necessary. It also helps to plan before charging into the shops – decide exactly what items you need and in what colour, and do not be tempted by non-essentials or fashion items.
I have found Project 333 particularly useful as well as the Capsule Wardrobe. Both work on the premise that you need less than you think and that, by just buying more clothing, you perpetuate the problem of “having nothing to wear” and end up cluttering your wardrobe. Less is more and both these projects teach you that. You only buy an item of clothing if you planned for it, the principle of “one in, one out” applies, and you end up spending less on clothing.
5. Debt: Ideally you should not have debt but, if you do, first settle the debt that has the highest interest. Pay off your credit card every month and, if your debt is overwhelming you, speak to your bank about debt consolidation.
6. Other: Check to see how much you are paying monthly in monthly banking costs. I changed banks and reduced my bank charges by 60%. I have found that shopping around for banks and credit cards is a useful and worthwhile exercise.
The same applies to cellphone contracts and short term insurance – both can be changed and cheaper options sourced.
I know this list is not exhaustive and would appreciate any cost saving tips you might have. I hope you are putting your finances first by empowering yourself and not by being overwhelmed by it.