Why should I budget? I know what my income and expenses are—why should I write it all down or keep a log? That is a common question and the answer is: even though we think we know what our expenses are we often forget and, unless we budget, we cannot keep a lid on our expenses. We live in a consumer driven society in which we are encouraged to spend so, unless we plan and budget, wants become needs and we end up overspending.
There are those who do not budget (non-budgeters) but spend as costs arise, have no savings plan and basically spend everything they earn. Then there are those who do budget. There are two types of budgeters—those who have a vague idea and check their budgets every few months, and those who are serious about their finances and check their budgets on an ongoing basis. Ideally we should be checking our budgets regularly; then we can quickly see if we have overspent on a category or have additional savings.
If you have set up a budget and check your expenses regularly, good on you. As you annually increase your grocery, electricity and other categories with the relevant increase, make sure you increase your retirement and voluntary savings annually. The 1st of March 2016 saw the start of retirement reform with SARS now allowing up to 27.5% deduction of our taxable income for retirement funding. This is much higher than previously and, as before, all growth within retirement funding is tax-free.
If you have not drawn up a budget previously, it can take a bit of time but, once it is done, it can easily be monitored. Most budgets are electronic and can be linked to your bank account. Some complain that amounts differ from month to month, so it is not easy to set up a budget. But some costs remain the same very month: savings; rent; bond; rates and taxes. Even electricity and water are similar from month to month. School fees, medical aid and insurance also remain the same. Maybe the only variables are food, petrol and clothing. But, to those categories, allocate a set amount and adjust if it is not adequate. The point is to make sure that all expenses fit into your net income. We all get so frustrated when Government cannot stick to their budget, end up overspending and have to borrow the shortfall, but we view our own budgets differently. We might even make excuses for our shortcomings but do not solve the problem.
Daily we work hard to provide an income for our families, so surely we should be accomplishing more with our income than just paying the bills? We should be working towards paying off our house, going on a family holiday, or paying for our children’s tertiary education. Whatever your dreams are, your monthly income can make provision for you to achieve those dreams, and it starts with a realistic budget. It starts with setting an honest, realistic budget and seeing how much you are spending and where.
What is a good budget you might ask? I use an electronic one and have heard many people say they enjoy 22seven; whatever budgeting tool you enjoy, get budgeting and take control of your finances.
There are those who do not budget (non-budgeters) but spend as costs arise, have no savings plan and basically spend everything they earn. Then there are those who do budget. There are two types of budgeters—those who have a vague idea and check their budgets every few months, and those who are serious about their finances and check their budgets on an ongoing basis. Ideally we should be checking our budgets regularly; then we can quickly see if we have overspent on a category or have additional savings.
If you have set up a budget and check your expenses regularly, good on you. As you annually increase your grocery, electricity and other categories with the relevant increase, make sure you increase your retirement and voluntary savings annually. The 1st of March 2016 saw the start of retirement reform with SARS now allowing up to 27.5% deduction of our taxable income for retirement funding. This is much higher than previously and, as before, all growth within retirement funding is tax-free.
If you have not drawn up a budget previously, it can take a bit of time but, once it is done, it can easily be monitored. Most budgets are electronic and can be linked to your bank account. Some complain that amounts differ from month to month, so it is not easy to set up a budget. But some costs remain the same very month: savings; rent; bond; rates and taxes. Even electricity and water are similar from month to month. School fees, medical aid and insurance also remain the same. Maybe the only variables are food, petrol and clothing. But, to those categories, allocate a set amount and adjust if it is not adequate. The point is to make sure that all expenses fit into your net income. We all get so frustrated when Government cannot stick to their budget, end up overspending and have to borrow the shortfall, but we view our own budgets differently. We might even make excuses for our shortcomings but do not solve the problem.
Daily we work hard to provide an income for our families, so surely we should be accomplishing more with our income than just paying the bills? We should be working towards paying off our house, going on a family holiday, or paying for our children’s tertiary education. Whatever your dreams are, your monthly income can make provision for you to achieve those dreams, and it starts with a realistic budget. It starts with setting an honest, realistic budget and seeing how much you are spending and where.
What is a good budget you might ask? I use an electronic one and have heard many people say they enjoy 22seven; whatever budgeting tool you enjoy, get budgeting and take control of your finances.