As a country we have recently received the National Budget Speech which outlined the government’s priorities for the financial year ahead. The National Budget is no different from your own personal household budgets.
According to Farzana Botha, Segment Solutions Manager at Sanlam Savings encourages South Africans to follow Minister Godongwana’s example and relook at their own financial priorities and stick to their financial plans.
“Over the past few years people have experienced greater pressure on their wallets, as our income has not been able to keep up with the increased prices we’re paying for practically everything,” says Farzana.
She explains that our country’s budget is like our own budget, with a focus on income and expenses. “It contains an income section, which refers to where the government gets its money from, and an expenses section, referring to how the government will spend this money. This section also deals with how our collective tax money will be spent.”
While the Budget Speech deals with income and expenses over the next year, it also relates to medium-term spending as well as some very long-term implications for the financial situation of consumers. “Just like we cannot keep on borrowing unnecessarily, government also needs to carefully manage debt levels. Minister Godongwana will explain how government plans to repay debt over the medium term,” explains Farzana.
According to a recent Sanlam survey, the top two financial concerns for South Africans are making ends meet and paying off debt. These short-term priorities compete with long-term financial planning, often resulting in many South Africans struggling to save.
“Not only do we need to save more to provide for our own future and for our families, but the economy also needs us to save. With high debt levels and low savings levels, as a nation, we are consuming today what we have not yet earned tomorrow,” says Farzana.
According to Farzana here are five tips to help you become minister of your finances:
- Go through your bank statements in detail. Most online banking applications allow you to look separately at the money that comes in and the money that is paid out. Pay close attention to the money that is paid out, especially all the small and often unnecessary purchases – these can add up quickly!
- Calculate this amount and use the insight to make changes to your spending patterns. This includes reallocating money usually spent on unnecessary items towards meeting short, medium, or even long-term financial goals.
- Budgeting often has negative connotations of limiting or depriving ourselves. Instead, reframe your mindset from a budget to a spending plan which includes small rewards. By doing this, you’re more likely to stick to it.
- If you are in a family or relationship, work together to agree on a family spending plan, discuss ways to share expenses, and set joint goals. Alternatively, make sure they understand your journey towards financial confidence and how they can support you.
- Set realistic milestones and reward yourself for meeting them, perhaps with your favourite takeout or coffee. These milestones could include behavioural goals such as swiping your card only three times a week or using a cash-only system to control spending. The envelope system took TikTok by storm last year with #cashstuffing racking up over 820 million views!
“If you feel overwhelmed at the thought of setting up a spending plan, consider partnering with an accredited financial planner. Through careful consideration of your unique situation, they can offer advice, guidance, and practical solutions to move from your current financial state to a better one,” concludes Farzana.
Also see: How to get your finance in shape according to expert
