It may seem like there is time before the start of the new year but in a blink of a eye you could be a few weeks into 2023 without taking care of finances.
A budget can help you plan your finances for 2023, make sure you are financially stable for the rest of the year and set you on the right path on your financial journey
Alexanderson said: “When you budget, you know exactly where all your money goes, where you can make adjustments to save even small amounts, and also how to effectively save and leave enough money for unexpected expenses and emergencies.”
Here are the five things that you should be doing to start your budget:
1. Know your income
Before you create your budget plan, it is important to know how much money is coming in. Work out the net income (after tax) of everyone that contributes financially to your household, whether it is your spouse, children or parents.
If you have a side hustle, you include the extra cash that you make into your budget.
2. List of your expenses
Separate the expenses in your budget into two categories:
– fixed costs – expenses such as rent/bond, levies, school fees, car payments, insurance and bank fees.
– discretionary costs – entertainment, fuel, clothing, data. toiletries and transport.
Also, have a column for your savings – money that you are putting aside towards a savings goal. It is important to have a savings goal in mind so you know what you are saving towards.
3. Emergency fund
Katlego Gaborone, a financial planner at Momentum said that people need to have at least three months’ salary saved up in an emergency fund.
This is an important step of any budget plan that will allow you to make informed decisions. Know how much money you can spend this month and save money towards buying what you want next month.
Having your financial priorities in order will also stop you from making a mistake that many people make: buying things that you don’t have the money for.
5. Be disciplined
You need to be committed and motivated to stick to your budget plan. Sometimes the thought of having to write down all of the information for your budget plan may sound tedious. However, if you stick to your budget plan, you will reap the rewards in the long run.