Making a budget and managing it proactively has always been the best way to stay on top of your spending, and in crisis times you need to ensure you save as much as you can.

Now is the best time to have a long, hard look at your money. Picture: 123RF/AVEMARIO
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South Africa’s lockdown isn’t likely to end any time soon. And even if it does, we’ll be expected to carry on with social distancing. This means more time at home – time that you can put to good use! 

You can get stuck into sorting your closet, start a new hobby, hang all those pictures you’ve been planning to use, plant a veggie garden… but now is also the best time to have a long, hard look at your money.      

Didintle Mokonoto
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Making a budget and managing it proactively has always been the best way to stay on top of your spending, and in these financial uncertain times you need to ensure that you spend as little as possible and save as much as you can.

So, sharpen a pencil and let’s get cracking!

Work out how much you spend

If you have a regular pay cheque, the amount you receive from your employer is probably your net income. If you have other forms of income – maybe from a side hustle or a rental property – make sure that you deduct all expenses, including tax, to get to the net income amount. 

Now log onto your internet banking and download your latest bank statement. This is an accurate and detailed document that shows all of your transactions and bank fees paid. There’s nowhere to hide! Use your bank statement to table all your expenses for the month. 

At this point, your budget should show your net income and your expenses. Balance the two columns and you’ll have a clear idea if you are overspending each month or not.

Check all your debit orders

A debit order is an easy and convenient way to pay for products or services that you receive regularly, because you don’t have to remember to make the payment each month. 

The danger is that you can forget to cancel a debit order for a service that you are no longer using! Use your bank statement to review all your debit orders, and cancel any services that you no longer need. 

Pay off your debt

Any loan that isn’t a private agreement is linked to something called the repo rate, which is set by the government. This rate informs the prime rate, which in turn dictates how much interest you pay on the loan. 

In the past two months, the South African Reserve Bank has cut the repo rate by 250 basis points – technical language that basically means you pay less interest. You might have noticed that your monthly home loan repayment, for example, is substantially lower. 

But don’t be tempted to spend the extra money on spoils for yourself. Rather increase your loan repayment to the same amount before the interest rate cut. You’ll pay back your loan faster and set yourself up for a prosperous, debt-free future. 

One last thing about debt: Always pay off the loan with the highest interest rate first. Store accounts and credit cards usually have higher interest rates than other loans.

Embrace technology to save 

Technology is allowing businesses to come up with creative and innovative ways to provide services more cheaply and efficiently.    

Insurtech (insurance + technology) companies such as Naked Insurance and JaSure have developed on-demand apps that allow people to tailor their own insurance solutions. 

You can switch your insurance cover on and off when you need it, which will reduce your monthly premiums. For instance, you may choose to insure your golf clubs only when you’re out and using them. 

Similarly, Flow is a proptech (property + technology) company that incentivises tenants to pay their rentals timeously, by offering monthly rewards including discounts on electricity, airtime and entertainment.    

One size does not fit all

Everybody will have a different budget – there is no one-size-fits all approach. During the pandemic, you might also find that you’ll have to adjust your budget more than normal, especially if your income has been affected by the lockdown. 

And don’t forget that you’ve also been saving on things like transport costs, eating out and school extra murals. You might find that you need a budget for lockdown, a potential budget for recovering from lockdown, and a back-to-normal budget. 

This is where a certified financial adviser can offer invaluable assistance. A trusted professional will be able to answer all your tricky questions, help you cut down on unnecessary expenses, and advise you on the best new investing and insurance products to suit your lifestyle so that you can spend less and save more each month. 

* Mokonoto holds the Certified Financial Planner accreditation and is the founder and CEO of YellowBlock

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