Review of your personal budget

Wow, this year is truly flying past, and it seems to be only picking up speed as it goes along.  No matter how much planning we do, life is unpredictable, and your financial circumstances do change along with your goals and needs. With the year almost half-way done, now is a good time to re-evaluate your budget and adapt where necessary.  If you’ve never done a budget before – now is as good time as ever to start!

Here are 5 easy steps to assess your current budget and change where necessary:

1. Is your current system working?  

Are you keeping to your budget and is it easy to keep track of it?  Whether you are using a manual system, a spreadsheet or an app, make sure it is user-friendly to you.  The easier it is for your to maintain and monitor it, the more likely you are to stick to it.

Have a look at one of our previous blogs, 8 tips to help you plan a weekly money date for some ideas on keeping track of your budget.


2. Calculate your income

Include any income you may have; regular pay checks, any additional jobs, any supplementary income, etc.  Remember to use your net income i.e. the amount after taxes are paid.


3. Calculate your expenses

This will include your fixed expenses like car payments, mortgage or rental fee, insurance, medical, school fees and any other financial commitments or debt you may have. Also include your variable expenses like groceries, petrol, clothing, entertainment, etc.

Remember to include occasional expenses, for example, your car license fees, birthdays and even additional medical expenses over the winter season.

We however still need to enjoy our lives as well so see where you can, include some “fun” money for little spoils to yourself during the year. This, of course, will depend on your current financial situation but is required.  Prioritise what brings you the most joy versus the costs thereof and make it part of your budget as motivation to stick to it.


4. Savings

Your saving remains important, and you should save towards three primary goals on a monthly basis; your emergency fund (unexpected expenses), your retirement fund and your personal goals (a holiday, a deposit on a new house or your children’s education).  Saving should be your top priority and should not be put on the back burner. Rather re-look at your expenses before you decide to cut on your savings.


5. Compare your expenses to your income and review your budget

Due to the changes in the budget announced in February and the unfortunate downgrade of our country’s credit rating to Junk status, the ordinary South Africans will feel the punch the most. For the majority of us, our disposable income will diminish, and the cost of our expenses will increase.  

Re-evaluate your current budget with your expected changes in your income and expenses for the next six months and look at where you can cut your costs. Also, consider the possibility of increasing your income. Take on a part-time job (temporary or permanent); maybe your hobby can provide additional revenue or look at selling some items you don’t use anymore.  

Be realistic about this and don’t set yourself up for failure. Your budget needs to work for you, not the other way around.  If you restrictions are too drastic and too soon, you will be discouraged and less likely to follow your budget over the long term.

If you’ve tried everything possible and still your expenses remain higher than your income, don’t get discouraged, give Debt Rescue a call.

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We look forward to the opportunity to get you debt-free!

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