Nothing makes me happier than having money at the end of the money, BEFORE payday arrives. I’ve been working for about a year and it still amazes me that the one thing in my life I have relatively good control over is my finances. Is it because I live with my parents? Is it because I have fewer expenses than most people? Maybe. But I personally believe that it’s my very strict budget. All through my life my father has told me that I don’t know how to budget (which at the time was true). However when you start working for your money, you learn quickly what works for you and what doesn’t. Here is my quick course on budgeting:
1) Save before you spend: Before you start drawing up your budget, be sure to put aside some money in a savings account. I have a certain amount set to transfer to a savings account every month as soon as I get paid. Which leads me to my next point…
2) Pretend you earn less than you actually do: I consider my earnings as a little less than the amount I have left AFTER I have saved. For example, if I have R500 after saving then I pretend I earn R300. That R500 is to remain untouched until absolutely necessary (I will discuss this later). This method work out as a great way for me to save money since at the end of every month I am surprised by my bank balance. Why do I still have money? Oh, yes- I earn more than I think I do. It feels like a present from me to me. Thank you, me.
3) Make a budget…but round everything up: I like to round up my expenses to the nearest hundred. This ensures that I am able to cover them sufficiently as well as having some extra money in case I need it. For example, the petrol price went up by a HUGE amount one month. It was a major strain on finances but it affected me just a small bit because of all the money I have saved.
4) Similarly, round up your spending budget as well: Make a list of what your usual purchases are and round that up too. I always over-budget for food (which I rarely buy) and clothes (just in case it turns out that I’m outgrowing them…AGAIN) so I know that I am always covered.
5) Remember to keep something for a rainy day: This is very important. Put aside money to use in case of an emergency. When I first started work, I was crazy about this. I insisted on keeping R500 in my account no matter what. I wouldn’t use the money even if I had no money for petrol or food. That money was not to be touched. This came in handy when all of a sudden, my car battery died and needed to be replaced. I was thrilled that my responsible ways finally paid off.
How do you budget? Are there any tips you have that I might have missed? I’d love to know below.