In our previous NewsBrief, we mentioned how middle-income consumers are spending up to 80% of their monthly salary within five days of being paid. A BusinessTech survey revealed earlier this year that 76% of respondents indicated that they save less than 15% of their salary, while 35% said they don’t save any money at all.
South Africans are notoriously known for being bad savers. So, in times like these when the economics are against us, it’s even more important that we get back to tried-and-tested money basics.
Budgeting is a great way of taking control of your finances. When you budget, you know exactly where all your money goes, where you can adjust to save even small amounts, and how to effectively save and leave enough money for unexpected expenses and emergencies.
Some of the best tried-and-tested budgeting methods include:
- The 50/30/20 budgeting rule: This strategy operates as an easy guideline for planning your budget by allocating 50% of your net income to needs like rent, groceries, and utilities; 30% to wants such as hobbies, vacations and dining out; and 20% to financial goals (that is, savings and debt payments). The further outlines that the reason this strategy works is because an integral part of succeeding at properly executing your budget is to understand your priorities and budget according to these.
- The 80/20 rule: Another budgeting method is the 80/20 rule which sets aside 80% of your income to needs, wants, and debts and then 20% is strictly designated for savings.
- The 70/20/10 rule: An alternative to the above rule, which says 70% goes to living expenses, 20% to debt payments, and 10% to savings.
By saving money, you avoid debt, which in turn relieves stress. If you have overwhelming debt, seek help sooner rather than later, and address it while ensuring you keep your compulsive spending at bay.
Budgeting doesn’t need to be complicated, nor should it take hours out of your day. In fact, the best ways to budget are often the simplest. And the easiest to become habit-forming.
Becoming a smarter shopper is a great way to save. Due to the unexpected changes in food costs, it can be difficult to prepare healthy meals without going over the budget. A few tips on shopping smarter include:
- Prepare a grocery shopping list beforehand and stick to it. Ensure that you limit the time in the store and only purchase the necessities.
- Shop around for the best prices on the items that you need to purchase, considering the weekly store leaflets, newspaper advertisements and visiting the stores’ websites or applications.
- Get to know the food prices. Write down the regular prices of foods you buy often. This will help you figure out which stores have the best prices and if you are getting a good deal on sale items.
- Always check the “use by dates” that are on the food items to reduce early spoilage and wasted money.
- Use a basket instead of a cart as you will have less space and it will force you to limit your purchases to necessities.
- Never go shop on an empty tummy 😊