It's national budget time and the state will need to tighten its belt, which means you will probably have less disposable income. Want to beat the budget shortfall? Learn how to stretch your budget.
February is budget month and this promises to be one of the most significant ones yet. Nenegate, the ailing rand, the drought, interest rate increases, food inflation and tax hikes are just a few of the issues we need to face.
While we cannot influence the economy as a whole we can definitely influence our own budgets by becoming lean and mean. Our pockets are going to be raided by economic factors, this is inevitable but by being smart about your personal budget we can significantly limit the impact.
You have to map out your budget with the tactics of a military exercise. Your first task is to do a reconnaissance mission. Have a long hard look at where you spend your money. While rent and utilities are the obvious expenses drill down to the small things you spend money on. These guerrilla expenses chip away at your cash flow because they often go unnoticed. However if you add them all they can represent many hundreds, or even thousands of rands.
Do a roll call on your credit cards and start trimming them down. Pay as much off as possible now because interest rates are going to push up your payments. Cull the clothing accounts, if you are honest with yourself you could wear a different outfit for six months from your current wardrobe. Make sure you have enough cash to cover important expenses like life and short-term insurance. Many people cut these important products to save a little cash. It’s the worst thing you can do when your budget is under fire. Even a relatively minor car accident can wipe out your budget if you don’t have cover, and the last thing you want is to leave your family vulnerable if something untoward happens to you.
If you have any of the “sins” that attract heavy tax, now is the time to give up those cigarettes. If you smoke one pack a day you will save a whopping R11,000 a year, hello vacation goodbye cough.
If you can get the little things under control a hike in interest rates or food prices will not materially affect you. If you are living in a combat zone with too much debt, now is the time to shed some debt and get fighting fit for the rest of 2016.
Hollard Investment Managers (Reg. No. 1997/001696/07) is an authorised Financial Services Provider.
