Reboot your budget
The world has changed over the past months; your life may look different and your habits may have changed.
The world has changed over the past months; your life may look different and your habits may have changed.
Here are 8 steps to reboot your budget to help you spend less, save better and feel more in control of your money.
Update your budget to reflect any changes in your household income. If your income has reduced, take full advantage of UIF, and any other support grants that may be available to you or your industry.
With most lockdown restrictions now lifted, think carefully about your spending habits. This is a time for cutting back where you can.
To see where your money goes, you need a clear view of your expenses. This could also highlight which spending habits you need to change. Go over your bank statements carefully; check that you aren’t paying for anything you don’t use or that doesn’t add real value to your life. Think about the changes you’ve made during lockdown – is there anything you can continue to do without or reduce?
Take the time to get comparative quotes for your insurance policies. This take a bit of work, but could save you a lot every month. It’s a good idea to do this every few years to check if you’re still getting the best deal.
Ask for quotes for both your long-term insurance (e.g. life and disability insurance) and your short-term insurance (e.g. car and household cover), but always compare the total coverage, requirements and exclusions, not just the fee. If you do find a better deal for the same cover, check whether your current insurer will match the deal. It may not even be necessary to move.
If you want to check whether you have the right insurance and medical cover for your needs, consider speaking to an FSCA-registered financial adviser.
If you are spending less during lockdown, or have found some ways to cut back (step 2), consider using the money you'll save to build your emergency savings.
The current pandemic and the related economic impacts may affect or continue to affect you in the future. It's recommended that you save enough to cover between 3 – 6 months of expenses in the case of an emergency (this could be a health issue, a job loss, or an unexpected expense like a repair). This may feel like a very big goal, but remember that every little bit helps you to build a buffer. So get started, even if you start small!
If you’re paying off debt, your monthly instalments are likely lower than they were a few months ago, because of the lower interest rate. Use this as an opportunity to repay your debt more quickly. If you're able to, keep your repayment amount the same as it was before the interest rate changes – you'll repay your debt much quicker and save on interest and fees. Alternatively, you could use the money you're saving on your instalments to build your emergency savings.
Your income may have changed under lockdown. If you are struggling to cover your monthly debt repayments, or think you may have a problem in the future, contact your credit providers right away to discuss what options may be available to you.
Now’s the time to decide how you’re going to track your spending to make sure you stick to your new budget. Decide what tools you’re going to use, for example, you could use a notebook, your bank statements, a budget tool on your banking app, etc. Ideally, set a check-in time every week, so you know if you need to make adjustments during the month.
Don’t forget the rest of your family! Discuss these steps with your partner and your children if you feel it's appropriate. Consider setting spending and saving goals together, and deciding together what you think are the biggest priorities. With everyone on board, it will be easier to stick to the plan.
