Close up of father and daughter celebrating Christmas with Santa during video call
The average family spends more time planning their vacation or entertainment activities than their personal and family finances. John Hall offers tips for keeping your budget in shape.
A difficult year 2021 is drawing to a close and the holiday season is looming. Unfortunately, for many, it won’t be festive at all, as layoffs, declining household incomes and the economic effects of the Covid-19 pandemic have dramatically reduced disposable income.
Budgeting is one of the most important tools to guide you through troubled financial waters, and there are many ways to navigate the holiday season and see the year on a sound financial footing, even with limited resources. your disposition.
Here are some tips on how to keep your family budget in shape.
Take inventory. Make a list of (and pay for) all your ârequiredâ expenses, such as rent (or mortgage payment), municipal account (or prepaid electricity), cell phone or internet bills (for emergency communications), tuition, insurance, medical assistance and travel costs. The second line of spending includes food, entertainment, clothing, and most importantly, savings for rainy days.
Cut where you can. Once you’ve compiled your expenses, figure out how to cut them and where to get items at a discounted price – saving money on your purchases can be compared to increasing income, so keep an eye out for specials on them. items you need to buy regularly.
This includes special retail offers, promotions on mobile phone contracts, and getting a discount if you pay certain expenses under certain conditions. Buying prepaid electricity in bulk can also save you money in the long run. It is important to know the cost of the items and to be constantly on the lookout for promotions.
Plan ahead. Planning your weekly menu ensures that you buy only the items you need. Plus, plan to use everything when preparing your meals – not only will you save money, but you’ll also reduce waste.
Cut the fat. Avoid non-essential items offered on credit, such as furniture and appliances, as the interest charged on credit terms is usually very high. If you can’t buy such an item with cash, then don’t buy it at all. Instead, add it to your future wishlist, and when you have the cash available, make your purchase.
Keep track. The average family spends more time planning their vacation or entertainment activities than their personal and family finances. It is essential that you keep track of expenses on a monthly basis.
This will give you an idea of ââhow much income you need and allow you to monitor the increases (or decreases) in those expenses. Most importantly, you can re-prioritize your expense list – move some up and down the list, remove others altogether, or add new expenses.
Make a sale. Sell ââunwanted items like an old phone or other household appliances. There are different online platforms where you can sell these items. However, be careful when using these platforms – whether you are buying or selling anything, beware of potential scammers.
Don’t blow it. If you receive a bonus, spend it wisely. First, use it to pay off any debt you might have; second, pay overdue expenses. If there is money left, save at least 50%; the remainder can be used to purchase necessary items that you were unable to finance during the year, such as appliances or clothing.
Pay next. If you are able to give your child a small monthly allowance, encourage them to save their money. You can reward them with “interest” if they show you that they have saved a certain percentage.
Also teach your children to save electricity, water and food. Not only will this save you money, but it will also ensure that they are responsible citizens who contribute to a sustainable society.
The best things are free. Many activities are inexpensive, or cost nothing at all. During the holiday season and school holidays, get out there and enjoy the beautiful South African weather. Research activities by collecting comments and ideas from everyone in the household.
If you are traveling, prepare your own food and snacks, and avoid expensive restaurants and take out.
Be inclusive. All household members should participate in the financial budgeting process and in discussions about household expenses.
By doing this, you are not only creating an understanding of a household’s financial situation, but you are also educating your children from an early age, thus creating a culture of financial discipline.
Professor John Hall is the Head of the Department of Financial Management in the Faculty of Economics and Management at the University of Pretoria. The views are his.