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If your debt keeps increasing, then you are spending more than you earn. Keeping track of your spending is the first step to financial freedom. Every year, the first task our Money Makeover candidates undertake is to see where their money is going. It is only with this insight that they can truly take control of their finances.
When assessing your spending habits it is usually the small things that do the biggest damage. We often look for “big fixes” or large items to cut from our budgets, but often it is an accumulation of smaller, everyday behaviours which is having the biggest impact.
REVIEW DAY-TO-DAY SPENDING HABITS
“I have realised that, in terms of my spending habits, I have an issue with impulse buying, especially on food. I used to do this with clothes too,” says product specialist Mlibokazi. “I spend a lot on Uber for transportation for my daughter from school, which needs to be cut down by finding her stable transport.”
He has now committed to spending a maximum of R400 to stockpile non-perishable groceries that will help reduce his monthly grocery bill.
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Start-up entrepreneur Sello identified that takeaways and Uber rides were eating into his budget unnecessarily.
“My spending on takeaways was unbudgeted. I would spend about R700 within a few days after receiving my salary. This month I have only spent R270,” says Sello, who has also cut down on Uber costs.
“In recent months I spent up to R800 on Uber for personal errands. I am now setting aside a day for the errands when I use my car instead,” says Sello, who has not used Uber this month.
Like Sello, medical technician Zihle has identified that the takeaways are costing more than she realised.
“I have decided not to buy food from the canteen at work or takeaways for myself and my sisters.
“We do have food at home, so I will try my best to cook and make lunch,” says Zihle, who was spending about R409 on takeaways.
She also identified that her expenses on airtime and data were higher than necessary and has decided to limit that. She has reduced that spending from R519 to R200 a month.
Soon-to-be retiree Johan identified a compulsion for online shopping as a problem. After takeaways, online shopping is one of his biggest budget breakers.
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It is very easy to get caught up in the excitement of a new purchase and the ease with which you can shop from the comfort of your home.
Johan was spending R200 a month on music and R450 a month on online shopping. He has now committed to not making any online purchases for the next six months, as well as no takeaways, which will save him a further R1 200 a month.
REVIEW YOUR FIXED EXPENSES
Any budget review must include a proper analysis of your fixed expenses. This includes bank fees, insurances, subscriptions and a general overview of all the debit orders going off your bank account.
Johan’s adviser Takalani had identified that a large percentage of his bank balance was going to debit orders. These were reviewed and non-essential debit orders were cancelled, saving him R2 600 a month.
This included the DStv subscription which Johan is prepared to live without. But he also saved money by consolidating his insurance policies.
For example, his life cover has funeral cover included, which meant he was over-insured for that. For essential insurances, Johan has shopped around to get comparitive quotes.
By switching to another insurer, the couple will save R1 000 a month on car insurance.
Zihle switched bank accounts, which is saving her R60 a month in fees.
She also went through her phone and unsubscribed from storage and music apps, which will save her R360 a month.
City Press will follow the candidates’ progress on the first and third week of each month, as well as online on the Money Makeover page:
. https://media24.shorthandstories.com/moneymakeover/
You can follow the story on social media #CPMoneyMakeover
. Facebook: @CPMoneyMakeover
. Twitter: @CPMoneyMakeover
