Budgets, buckets, and how to manage debt
5 min read
Hoping it rains money is wishful thinking. It’s Spring and there’s no better time to dust off your budget, check your bucket for leaks and make debt work for you. Read our 4 tips on how to Spring clean your finances.
Dust off your monthly budget
Budget sounds a bit like bucket, and that is what it is. Every month you fill up the bucket with your salary, and then you start emptying it, a cup here, a cup there, two spoons next week. If you plan it right, your bucket will still have a little something in it by the time you get to fill it up again. If your bucket runs dry before then, it’s likely that there is a leak somewhere.
Planning your budget is the start to patching up a leaky bucket. It is the simple exercise of comparing what goes into your bucket and what you take out again. The stuff going out can be divided into must-pay and nice-to-buy. The must-pays are things like insurance, bank fees, car premium, medical aid, and school fees. The nice-to-buys are takeaways, a jol, some sunglasses.
Leaks in your bucket
Obviously, the must-pays have to be sorted before you can start on the nice-to-haves. But it is worth looking at these must-pays. Sometimes they are ‘must-pay too much’.
Look at your service fees. There is always a list – a couple of hundred here, ninety there, some more around the corner. Monthly account fees, transaction fees, internet fees, fees for thinking about your fees – these all add up and your bucket is leaking without much notice. When last did you check what your bank fees are costing you?
Another leak could be your insurance. They tell you they won’t pay out the full amount if you are underinsured, yet the value of your car keeps going down, while the premium stays exactly where you started and goes up every so often! The insurance industry is very competitive and you should ask your current insurer and a couple of other companies to quote every year or so. You will be surprised at how much you can save.
Little drips and drabs
Even tiny leaks can empty your bucket. Go through your bank statement and highlight every subscription. It could be a couple of bucks here and there, for stuff you no longer use or that recurring subscription that your kid unknowingly signed up for whilst playing Fortnite. Get rid of them. Look at other costs: how much do you pay for airtime or data, or a varying bill? And how much is it costing you in fees? These amounts, added together, can really mess up your carefully planned budget.
Think of other costs – that cup of coffee you buy every day on your way to work. Let’s say R30 a pop times 22 working days in a month. That is R660 per month for something you can get for free at work anyway. Look, instant ain’t great but saving some bucks in the long run will be worth it. Add your lunchtime sandwich, four supermarket plastic bags every other day, and soon you are talking about real money flowing out of your budget.
Use loyalty cards, but think about them. If you are going to buy cheese anyway and your card gives you a discount, great. But if you buy this to get that, but this for that costs more than this on its own, don’t buy it.
Manage your debt
Everyone knows the stories about people borrowing money to pay for groceries. But if you have a good credit score, you can ‘borrow’ money at 0% for a period, normally 30 days on a credit card. But how do you get a credit score?
You start small and make sure you meet your obligations. As your credit score improves, so will the amounts you qualify for. A great way to do this is to use your Spot app. Deposit your salary into your Spot account or top up , and pay your rent, buy airtime or data and prepaid electricity on a monthly basis. Doing all this on Spot regularly, builds up transactional data that can help you achieve a credit score!
With a little bit of planning and some discipline, you can look at your debt and smile too.