10 practical tips to #SpringClean your budget to avoid feeling the pinch

South African consumers have to dig deeper into their pockets every month with increasing fuel, energy and living costs. With the imposing pressure of servicing debt, it is obvious that smart budgeting is necessary.

The price of petrol will rise by 67 cents a litre and diesel by 44 cents a litre in September. Electricity tariffs are set to increase by more than 20%. In addition to this, preliminary statistics from Stats SA reveal that many South African are under a huge amount of debt-related pressure, with 48 169 civil summonses issued for debt in June alone, to the value of more than R350 million.

“If you haven’t looked at your budget in a while, then now is definitely the time especially considering the upcoming fuel price hike,” comments Susan Steward, Marketing Manager of Budget Insurance. “Changes in both the economy and your personal life affect your budget, which is why it should be revisited on a regular basis.”

To help get you started, here are 10 questions to ask yourself:

Have your income and expenses changed?

Many people get their annual increase in July, which gives you little more in your bank account. Think about how best to make use of this extra money.

Have you been slack in paying off your debt?

Between credit cards and store cards, it’s easy to get caught up in buying on credit and forgetting about the debt you’re racking up along the way. So go through all your statements and pay off outstanding debts or at least put a plan in place to do so, like this 4-step plan for paying off debt.

Are you cutting corners where you shouldn’t be?

We all know which costs are most likely to get the cut when it comes to budgeting and one of them is insurance. The question, however, isn’t whether you can afford to be insured, it’s ‘can you afford not to be?’.  Without the right cover, you could be in a far worse-off financial position.

Are you willing to compromise and reprioritise?

Know the difference between needs and wants because when you’re feeling the squeeze at mid-month, you may find yourself regretting those lavish purchases. Avoid putting yourself in the position where you have to compromise on important things like family health care or your kids’ education. It’s best to comprise and be kind to your pocket.

Have you been sticking to your saving goals?

There are many ways to help break the bad habit of not saving that will force you to save every month. Set up a monthly debit order to an investment account, open a tax-free savings account and increase your pension fund contribution. For more ideas, take a look at these 10 best budgeting tips to make you save money.

Do you save for emergencies?

What if you were in a situation where you needed money urgently, like if you were laid off at work or your car needed major repairs? It’s not something pleasant to think about but it’s vital to be prepared for a rainy day. The amount you save towards an emergency fund depends on personal circumstances. Ideally, an emergency fund should cover three to six months’ living expenses. This might seem like a difficult feat, but just by putting aside R250 a week, for example, you have saved R1 000 in a month.

Do you track your spending?

A good way to do this is to look at your monthly bank statement and see where most of your money is going. You may be surprised at just how much you’re spending in certain areas and how by making small changes you could keep your spending in check.

Are you paying unnecessary and outdated fees?

You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. This is wasted money that could be going towards saving or paying off debt.

Are your rewards programmes actually benefitting you?

Many stores and service providers offer rewards programmes but not all are created equally and not all are beneficial to everyone. While it’s tempting to join every loyalty programme, beware that you may be overspending just to get something small in return. Always read the terms and conditions carefully before signing up as there may be hidden costs involved.

Are you empowering yourself with financial knowledge?

In today’s digital age, you can find the answers to almost any question on the Internet. How to save? Where should I invest my money? Why should I have a pension fund? This is great for understanding the basics but always consult with a financial advisor before making decisions around saving, spending and investing.

“Answering these questions fully and honestly will give you the perspective and insight you need to make better budgeting decisions,” concludes Steward.