Most of us would have heard the phrase ‘New Year, New You’ at some point already this month but according to research, 80% of New Year’s resolutions fail by February. Google Trends for South Africa shows that by January 10, search topics related to ‘New Year’s Resolution’ fade entirely.
However, there is still one resolution which consumers would be wise not to give up on and that is sticking to a budget in 2019, says Budget Insurance.
“We need to consider some of the economic pain points which we can expect for the rest of the year. If you haven’t taken the time to take stock and get your household budget in order, it is best do so now, and stick to it,” advises Susan Steward from Budget Insurance.
This year we can expect further currency volatility, changes to tax reforms post the budget speech and general economic uncertainty up until the national elections. These developments will require consumers to become even more vigilant with their spending habits, especially in the first half of the year.
“For example, while the petrol price decrease is a welcome relief, this shouldn’t be considered as an opportunity to go on a spending spree. Rather, consumers should take the difference in the decrease compared with last month’s cost to fill their fuel tanks, and put it into a savings account or use it towards paying off debt,” advises Steward.
Budget Insurance offers the following advice for drawing up your 2019 budget:
The first step is to draw up a list of your fixed expenditures and other monthly deductions and tally these up against your income. If your expenses are more than your income, then you need to begin planning how you are going to reduce them. If you do have some money left over every month but believe you should be saving more, draw up a budget to stick to and gain control of your expenditure.
Some areas are easier to trim down on so concentrate on them first. Remember, even the smallest adjustments can make a meaningful difference over the long term.
Once you have trimmed-down your expenses, you can start channelling the extra money you have into paying off your debt faster, starting with those with the highest interest rates first.
Make sure your budget has a goal, whether it’s to pay off your credit card debt or save money for a family holiday. Working towards a goal provides direction, makes it more fun and, delivers a sense of accomplishment when the goal is finally achieved.
Be realistic. If you set too lofty a goal and reaching it means deprivation on all fronts, the likelihood of you sticking to your budget is minimal.
Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your financial situation.
Five things to consider when reviewing your budget:
A service provider audit: shop around for less expensive alternatives on cell phone deals, gym contracts and other subscription-based monthly costs. Also, try negotiating with your current service providers for a better rate, especially if you have been a long-term customer.
Consider those big expenses: if repayments on your car, maintenance and petrol are eating up a third of your income every month, then it is time to reconsider whether or not to downsize. Other big ticket items such as your monthly rental payments and consolidating your high-interest debt should also be tackled as part of your budget review.
Avoid expensive mistakes: being underinsured is one thing which can drastically increase your expenses despite your best budgeting intentions. This is especially true for items which we tend not to insure but are in fact high risk such as cell phones, laptops and home contents. At the same time, being over insured is also costly so go through your various policies and be clear on the type of cover you pay for each month.
Planning a holiday: when deciding to take advantage of the many long weekends and upcoming holidays in 2019, it’s best to plan and book this as far in advance as possible. Also consider taking a trip in low season (if school holidays don’t affect you) and look for early bird specials or deals.
Beware of eating in: going out for dinner more than once a week can really hike up your monthly food bill but so too can eating in, when ordering food delivery. Also be weary of using food delivery apps which can have high surcharges. Rather opt for preparing and eating food at home and reserve eating out for well-deserved treats.