Four steps to rethinking your budget

By Isabelle Coetzee

We all think about budgeting at the end of each month. But before we know it, the new month has started and our debit orders are already going off.

When last did you actually sit down and consider your spending habits and whether they’re helping you work towards your future goals? We find out how to set goals and reassess your budget.

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Consider these steps when budgeting

According to Doret Jooste, CEO of FNB Money Management, the word “budget” takes the fun out of looking at your spending.

“The process may seem tiring and uninspiring, however, it’s still important to have a proper budget. I recommend looking at the following four steps to help change the way you look at budgeting and, more specifically, your spending,” says Jooste.

Step 1: What do I value?

The first step is allowing yourself to dream a little and think about your future. Where do you see yourself in 10 or 20 years? What are your dreams and aspirations? Answering this is a good starting point to help you decide where to allocate your money.

Step 2: Prioritise

Now that you have an idea of what you value, you need to prioritise this. Here you should decide which values are most important, so that you can start directing your money towards them.  

It’s important to first choose the values that are most important to you as well as ones that will set you up for financial wellbeing in the long term. Jooste advises choosing a maximum of three values. She believes you can always come back and add more items to your values list.

For example, Jooste says she can only afford to do three of the things she values, so she has to prioritise:

  • Paying off debt
  • Furniture for our new home
  • My children’s education

Step 3: Trade-off and action

The next step is to align and direct your spending to the items on your values list, according to your financial situation. This might be a bit uncomfortable, as you will need to go through all your spending to see where you can free up money to start achieving those values that are most important to you. 

Jooste says you should push through – it will be worth it! Going through your bank statements and marking opportunities to reduce or eliminate spending might help.

She suggests being as critical of your spending as you can, to ensure that you are allowing yourself the maximum opportunity to achieve the things you value.

Step 4: Review and repeat

Make budgeting a habit. This is not a once-off exercise; set aside time in your calendar on a quarterly basis to review and repeat the exercise. Your values and spending may change over time, and you should check whether your circumstances have changed.

Ask yourself what worked well this quarter, what didn’t work so well, and if it didn’t work, what can you change?

Jooste warns that you shouldn’t become the proverbial hamster running on the wheel. “Let’s break the cage and start chasing what we really want in life,” Jooste advises.

Practical guide to drawing up a budget

According to Elena Bevilaqua, certified financial planner at Fiscal Wealth Management, you need a plan that’s going to help you stay focused and disciplined. 

She recommends drawing up a list of your income and expenses, and then outlining the amounts you receive and the amounts you’d ideally like to spend. Have a look at the below table:

  Budget Actual 
Wage & Salary    
Other Income    
Total Income    
Fixed Expenses    
Variable Expenses     
Total Expenses     
Net Position (I-Ex)    

Bevilaqua says that by getting your monthly budget in order, you will begin to free up cash that you can contribute towards your savings.

“You then need to set short-, medium- and long-term goals. We all have aspirations, ideas and dreams – and they will almost certainly cost money.  We need to save to achieve these goals and set goals that are realistic and achievable,” says Bevilaqua.

Setting financial goals for your future

According to Sarika Maharaj, product manager at African Bank, financial goal setting is the next step to consider once you’ve created a budget.

“Think about things like growing your family, education, planning for holidays, savings needs, upgrading your assets and standard of living, and retirement and funeral cover. Determine when you want to reach your goals and how long you will need to save,” says Maharaj.

He highly recommends including your family in your goal setting plan so that you can work together to reach those goals. He believes goals will only be reached if you make them part of your budget and saving plans.

“Make sure your goals are realistic, achievable, and measurable. If you aim too high, you may get demotivated and you will not be able to exercise the monthly discipline you need to get there,” says Maharaj.

“When setting your goals, also take into consideration your family's needs and think carefully about these. For example, you should not buy a new car if school fees are not being paid. Goal setting can only be successful if you understand how to set your goals and then how to achieve them,” he explains.

Maharaj recommends rewarding yourself when you see improvements and good financial behaviours, and he encourages celebrating this as a family when goals are achieved.

Have a look at our budget calculator to work out where you stand today.

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