Isn’t nature truly amazing?
It is only the second week of September, and the trees are already starting to bud without much rain at all (ok maybe a few drops). It’s as if nature just knows that some long-awaited moisture is on its way, and it’s time to get ready to lap it up. Off with the old foliage and in with new green sprouts!
Can we learn anything from nature?
You bet ya! There is a lesson right there. It’s a new season and it’s out with the old and in with the new. When it comes to our finances, we often get stuck in a rut and, just like Mother Nature has an annual “spring clean”, so should we. In this blog post, we are going to arm you with two easy steps you can apply to your finances today, to free up some cash in your over-extended budget.
Step one: Pull down a monthly statement from your online banking profile
Now grab a couple of highlighters and start examining the numbers. Focus on money that’s heading out of your savings or chequing account. Highlight all your fixed expenses first (like your bond repayments, rent, school fees, medical aid contributions), then sum them up and make a note of it.
Example: I’m spending R15 000 on fixed expenses every month.
Now take another highlighter and tally up all your variable expenses like entertainment, groceries, the morning coffee run before heading into work. Again, tally all of that up and make a note of it.
Example: I’m spending R6 000 on variable expenses.
The truth about trying to find extra money in a budget is firstly being aware of where all your money is going every month. This exercise, which shouldn’t take longer than 30 minutes, will help you identify that. Focus on the variable expenses first because it’s much easier to limit the number of cappuccinos you have every month rather than trying to negotiate a 20% discount on your rent when you’ve already signed a 1-year lease agreement.
The devil is in the detail and when it comes to our finances the details about our disposable income and in the impulsive purchases we make, are important to look at:
- Identify how much you are spending on entertainment every month and try and cut back
- Identify any impulsive purchases you make and ask yourself why you are making those choices
- Give yourself a new revised “variable expense” budget for 3 months and see if you can stick to it.
When it comes to fixed expenses it’s a lot more difficult to shave off bucks, but one place in our budget you could be re-assessing at least annually is your insurance portfolio. And this brings us to step two.
Step two: Revisit your insurance policies
We aren’t encouraging people to cancel their existing life cover to save some money. That’s a bad idea and very often it can backfire horribly. What we are suggesting is that on an annual basis you assess your life, disability, severe illness and income replacement needs and make sure A) You have the right amount of cover in place B) You aren’t paying too much for your cover.
Are you looking to spring clean your finances?
We would be very interested in hearing your comments below.
Until next time.
The Wise About Life Team