Personal Financial Management: The Perfect Budget Planner

Most of us don’t like budgeting, to be honest, it’s boring and we usually don’t stick to them. Essentially, budgeting is simply a fourth-grade math problem. But the tricky part is sticking to the budget. A budget is nothing but a simple spending plan that helps you prioritise your money. So, how do you create the perfect spending plan?

If you take home R10 000 every month. How do you pay for housing, food, medical bills, transport, debt repayments and still include fun activities, without running out of money before the end of the month?

Budgeting is knowing how much you earn and how much your expenses should be each month.

There’s usually a lot to pay for with a small amount each month. So, a simple spending plan can go a long way.

How to create a spending plan 

We’ve become somewhat discouraged to budget because we have this idea that budgeting is complex, and it restricts us from letting us do what we want. Luckily that’s not what budgeting is about.

Budgeting is nothing but a simple spending plan. Afterall “a fool with a plan is better off than a genius without a plan!” T. Boone Pickens.

A good spending plan is easy to set up and simple to use. Your spending plan should help you pay your bills on time, save and pay off your debts while giving you the freedom of paying for the fun things in life.  

1. Figure out your income after-tax 

Your income after-tax is what you have left from your salary for spending. This may already be deducted from your salary. It’s best to check-in with your HR department if you are unsure.

If you have other sources of income – like from your side hustle – take away any tax or business expenses.

The amount you’re left with is what you have to spend.

2. Track how you use your money

You can do this in a few ways. You could track your spending manually or automatically.

Tracking your spending manually

You can set up your own personalised Excel spreadsheets and jot down your monthly transactions. Essentially your bank is doing the tracking for you, you’re just making sense of it all.

Doing a quick Google search for budgeting spreadsheets will set you on the right track. Find one that suits your budgeting needs.

Tracking your spending automatically

Another way of tracking your spending is through an online budgeting app. All these apps work differently, finding one that works for you is key.

If this is the route you want to take, choose an app that is secured. Putting your banking details online may be a risk, so do your research carefully.

If you want to try the budgeting app route, we suggest 22seven.

22seven is backed by Old Mutual, which is great for various reasons.

Having a big corporate backing the app makes it more reliable and offers a greater attention to detail. 22seven helps you manage all your money in one place. The app tracks all your accounts, all your transactions, all in one place.

That means you can link all your credit cards, bank accounts, store cards, investments, loans and rewards on the app.

The app will give a personalised budget, based on your spending habits. The app allows you to see exactly how much you spend throughout the month. Making it easier to track your spending and cut down on unnecessary expenses.

22seven will give you hints or observations as to how you use your money and where you can improve. The app can tell you that you’ve spent R2 000 on takeout’s over the past two months. Which is R 66 daily. That’s a pretty cool insight.

Although the app can’t make you spend less on takeout’s, you can use these insights to cut down on unnecessary spending.

The app allows you to also invest your savings. Although this sounds like a good idea, be careful when investing through 22seven. When looking at some reviews, we found that investing through the app is the company’s downfall.

Luckily, you don’t need to invest your money through 22seven or Old Mutual. It’s your money, you invest it where you see fit.

These days hackers can get in almost anywhere. When it comes to sharing your personal information online, especially your banking details, security is crucial.

The 22seven security system offers the same level as banks, governments and the military, making it very secure. The company that takes care of their security is one of the largest security companies in the world, Yodlee.  

Your username, password and other information you provide 22seven, which is in an encrypted format, goes directly through Yodlee. Your information is never stored with 22seven. Not even Yodlee employees can access your information. The only way your information can be touched is when the Yodlee system decrypts the information. And that can only be done when requested.

22seven also works with Entrust to further protect your information. They protect all your information that is transferred over the internet by encrypting it using 256-bit encryption. The system protects your information even if it were intercepted.

We encourage you to do your research on 22seven or any other budgeting apps, especially when it comes to their security measures. Choose carefully before making a final decision.

*We are not affiliated with 22Seven in any way. 

3. Automate your payments 

In this day and age, almost everything is automated. So why not automate your spending. Automating your payments helps to stay within your budget and allows you to pay your bills on time, every time.

Setup monthly debit orders or scheduled payments to go off as close to payday as possible. You want to make sure that you don’t have a chance to touch that money.

The last thing you want is to spend the money that was meant for debt repayments. This will send you in a debt spiral.

4. Visit your budget as needed

Your salary will increase; you’ll have more expenses and your priorities will change. As these changes happen, revisit your budget and adjust accordingly. 

The simple spending plan in action

Figure out your monthly nugget 

A simple spending plan cuts straight to the point. Your spending plan is there to help you get your money to all the right places without getting you in trouble.

You do that by figuring out what your monthly nugget is. Your monthly nugget is how much money you have left after paying everything that needs to be paid. Your monthly nugget is what you’ll have leftover for all the fun stuff. This is your spending allowance.

You can use your spending allowance on anything you want. Beer, movies, travel, luxury items, anything you want. As long as you pay all your needs payments on time and every time, you’ll be good.

Pretty simple right.

If you’ve got unexpected payments to make, dip into that monthly nugget. You can sacrifice some fun to make up payments.

But what if there’s no monthly nugget left?

It’s not the end of the world. You’ll be okay.

If your monthly nugget falls into the minus, you have to find a way to make up the difference. This seems like a terrifying and daunting challenge. But you’ll have to earn more money to keep up with your payments or lower your monthly expenses.

For a start, and for a short-term solution only, you can dip into your savings and make up some payments that way. However, ultimately you want to earn more money.

Alternatively, find a way to make some extra money from home.

If your monthly nugget falls so far into the minus that you don’t know which way is up. You might have to consider debt counselling.

Your simple spending plan 

Use a method that works for you to keep track of your spending. You can set up goals for yourself to help you focus your spending. See how little you can spend from your monthly allowance and push that amount to your savings or debt repayment.

For example, if your monthly grocery allowance is R2 500. You can use your credit card to make these purchases. Once your credit card balance has reached R2 000, you know that you need to start cutting down on these purchases.

Budgets are boring and you won’t stick to them. You’re better off with a simple spending plan that shows you how much you need to spend on the important things. And how much you should have leftover for the fun things in life.

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