Sanlam recently launched a video campaign in aid of Savings Month. They enlisted a guy known as The One Rand Man who spent the past month without any form of credit or online financial services. In fact, all he had was his salary paid out to him in R1 coins. After watching the series of short videos I was left with a strange sense of déjà vu. This One Rand Man could easily be me or any one of a number of people I know.
Simply put, we don’t budget.
After seeing how he ended this month with the grand total of R6 to his name, I soon realised that something had to change. I need to learn this art of budgeting. Here’s what I managed to come up with:
1. Start From Scratch
All told, it’s not the hardest thing in the world to work out how much money you have every month and where most of it goes. While not as graphic as R1’s in Tupperware boxes, a simple list of monthly expenses leaves one with an idea of where it all goes. And “goes” it certainly does. Now that I had an idea of how much I actually had left, I could start planning my month.
2. Easy as 1,2,3
Well not quite. Once you’ve worked out all the things you think you will be spending money on, you start to find little-hidden costs you never considered. Bank charges for one – while I knew I was paying them, I didn’t know exactly how much or if there were cases I paid more. Becoming aware of where my money was going was a fundamental step in wanting to shift away from the credit trap.
3. Bad Habits Maketh the Man
Pretty quickly I realised I have developed some terrible financial habits. Things like drawing money from the wrong ATM, using credit to pay for petrol, or simply not looking after those R2 coins left over from a night out. They all add up. And they all cost you at the end of the month.
4. When It All Runs Out
Now, this is the part we need to consider. Salaries run out, and pretty quickly. Soon you realise your money doesn’t go as far as you would like and your debt simply grows as your charge things to your credit card. It’s a cycle that seems almost impossible to break.
5. I Need Help
So budgeting is easy, sticking to it is the hard part? Wrong. Budgeting is not easy. Because we have arrived so late in the day to this idea of being aware of our money, our cycle of debt has reached the point where things are no longer manageable on our own. One could consider debt consolidation – lumping all that debt into one easy, less painful payment per month. Or look into something that gives you a clear breakdown of everything you need to worry about.
One such site is moneysmart. They help you control your budget and keep track of your credit report from the three major bureaus XDS, TransUnion and Experian. Simply plug in your details and they help devise the correct budget strategy for your life.