financially secure family

The purpose of this budget exercise

If you are anything like me, you have great expectations and plans for your future financial freedom and from time to time do a few sums in your head, thinking that you know what your monthly expenditure is. There is only one way to plan successfully for the future and the very first thing you need to do is put a monthly budget together.

This may sound simple or unnecessary because you “think” you know what your expenses are, but humour me, do it once thoroughly  and you will be amazed at how many expenditure items are on your list that you simply don’t account for.

If you have ever asked yourself, “where did all my money go?” or, “I don’t know what happened this to my money this month” then you are an ideal person to start budgeting. Knowledge is power folks, and unless you know what you are spending your money on, you simply cannot save for the future.

Perhaps the Corona-Virus has put most of us in a position where we need to take a serios look at what we spend our money on, in order to reduce our expenses. I personally could not believe how much money we spend on eating out, going out with friends and weekend vists to the market or shopping mall. The amount spent on food from restaurants each month could cover our monthly food shop for at least 3 months! Just the saving on coffee purchases was astounding.

Do yourself a huge favour and make a note of every time you buy a coffee, get a takeaway or go out to dinner. At the end of the month you will be astounded at the amount you spend on these items. Then ask yourself, “Do I really need to buy a coffee every day?” or “Do we really need to go out to dinner with friends 2 or 3 times a week?”. I know it is antisocial not to, but what about having a braai at your place instead of visiting a restaurant? All of these things make a difference.

How to go about preparing a household budget.

Download a free budget spreadsheet

This budget spreadsheet is really easy to use and breaks down your expenses into categories so that you can easily see where your money is going. Once you have a good handle on your expenses and savings, you should try to increase the amount saved from the “frivelous” expenditure.

I urge each and every one of you to take na serious look at this and be very honest with yourself and your family about where you want to be in the coming years from a financial standpoint. There is also an enormous effect on your emotional well being when you are firmly in charge of your finances and are able to react quickly to any change in circumstances.

While you are compiling the spreadsheet, it is an excellent time to start or perfect a filing system with your accounts. Never again will you be scratyching around for accounts for FICA ar RICA or SARS or anone al=se for that matter. Everything will be easily accessible and in one place.

There is absolutely no exuse for you not to do this budget exercise. We have made the spreadsheet available!! Please Just do it! You will become financially free!

Extra payment savings on bond.

This is a simple example of the enormous effect additional payment on your bond have on your future.

Bond amount: R1 000 000
Repayment: R7753
Loan period: 20 years
Interest rate: 7%

If you save R1000 per month and put it into your bond

Reduce bond period to: 15.73 years
Total Interest saved: R208 000

If you save R2000 per month and put it into your bond

Reduce bond period to: 13.06 years
Total Interest saved: R336 000

Reducing your insurance costs

Most of us take out insurance for our home, household goods and car and never look at it again. The short term insurance market and in particular, the car insurance business has become so competitive that you are likely to save money if you request competitive insurance quotes. This is an exercise that should not take any longer than 30m minutes and is very likely to save you some money every month, so take make the commitment to get quotes.

I hope this has inspired you to do a budget and take a good look at where you spend your money. It is up to each of us individually to make sure that we are financially secure later in life. The last thing you want is to need the state to look after you in your retirement