Stress less, budget more

There are a lot of ways you can budget, but when it comes down to it, they all revolve around the concept of spending your money wisely.

Senior United States senator, Elizabeth Warren, popularised a budget rule known as the 50/20/30 rule. The rule comes from her book All your worth: The Ultimate Lifetime Money Plan. The rule basically states that 50 per cent of your income, after tax, should go towards your needs, 20 per cent should go towards savings, and 30 per cent should go towards your wants.

The non-negotiable bills, that you absolutely need to pay, will fall under needs. These bills include rent, health care, utilities, cars, and insurances.

Your wants include things that aren’t essential, but you still spend money on, such as DSTV, holidays, electronics, wi-fi, and choosing the more expensive option on something.

Your savings section should include investments and emergency money. Debt repayment can also form a part of the savings category.

Budgeting can be a daunting thought, but it isn’t as bad as it seems; it is basically just planned spending.

The Dave Ramsey blog has summarised 15 easy steps to make budgeting simple. While these tips are for a set income, it is just as easy to implement them on an inconsistent income. If your income fluctuates, work out your budget according to your lowest possible monthly earnings.

1. Budget from zero – before the month begins, plan your budget and give every rand you earn a use. It doesn’t mean that you will have no money left in your account, it just means that every expense is accounted for, and what isn’t there will be in savings.

2. If you are part of a couple, budget together. People who live together should be on the same page money-wise. This creates less tension, fewer fights, and more peace of mind.

3. Remember that every month is different – you need to account for the fact that you will not be servicing your car or buying birthday presents every month. There are some months where pop-up expenses aren’t there, but you need to make sure that you put some money aside every month to cover these categories when it comes time to spend money on them.

4. Make sure you pay for what is important first – this would be everything in the needs category mentioned above.

5. Pay off your debt, if you have any. This should be one of your top priorities, as debt tends to snowball; whether it be from interest or just borrowing more and more money, the debt will increase. That is why it is best to get it out of the way as soon as possible.

6. Come to terms with the fact that you may need to implement budget cuts. You may be at the point where you need to cancel your DSTV subscription, dine out less, and shop at cheaper stores. Budget cuts are nothing to be ashamed of, they are smart decisions that should be praised.

7. Create a schedule – if you know exactly when each debit order goes off and what date you need to pay each of your expenses, it makes budgeting a lot easier. A good thing to do is also plan which day of the month you will buy things, like groceries. Knowing exactly how much money you will need, and when, takes away a lot of stress and potential over-spending.

8. Track your progress – if you know how much you are spending, and on what, it is easier to see where you need to cut back and where you may be able to add a bit more leeway.

9. Add a safety net to your budget – put a small amount of money aside for unexpected expenses. This safety net will take a lot of the stress off when something happens that you had not planned or budgeted for.

10. Get rid of your credit cards – creating debt and relying on borrowed money is no way to become financially stable. Without a credit card, you will not be tempted to spend money you don’t have. You will eventually need to pay the borrowed money back, and the interest rate is just terrifying.

11. Be accountable – get someone to go with you when you do your shopping and make sure you stick to your budget. If you are going grocery shopping, draw the amount of money you had budgeted for so when it is done, it’s done, and you can’t spend more.

12. Try an online budgeting tool or app – there are so many programmes and applications that help you keep track of your money. If you don’t trust them, use an Excel spreadsheet, because at least then you have your budget on paper and can see what is happening.

13. Stop comparing – you have a lot more than you realise, so stop comparing your financial situation to others. If you stop comparing, you will be happier and it will help you save money because you are not spending to impress.

14. Have goals – focus on why you are saving money; whether it be to pay off loans, build your emergency funds, or pay off your house and car.

15. Be patient – it usually takes a few months before you get a hold of the whole budgeting thing. You won’t get it done perfectly on the first or second try. Give yourself some grace; you will get there.