Money makeover | Tell your money where to go
How to get the most from your money. Photo: Getty
Follow six regular South Africans as they take the Absa / City Press Money Makeover Challenge and undergo a financial makeover internship over the next six months. Each candidate was assigned their own Absa financial advisor.
Thirty years old, Gugu was determined to cut spending and pay off debt. Thanks to the lockdown, she was able to work remotely, which allowed her to return home. This meant that she could save on rent and she sold her car because she didn’t need to commute to work every day.
Gugu has started budgeting for his monthly expenses and buys his personal items in bulk when there are promotions.
“In our community, we are embarrassed to talk about money – it’s taboo. I was even afraid to print my bank statements; it was embarrassing when I saw where I was wasting money. I was scared because I wasn’t sure if I would ever get out of this space. Once I started budgeting I saw the change in managing how little I had. “
Tell your money where to go
A key aspect of any spending plan is to include a savings category. While single mom Maryke had good control over her budget and didn’t have a lot of debt, her advisor Leigh-Anne Decker identified that Maryke had not allocated any money to savings. You’ll never start saving unless you budget it and make that payment before you start spending.
Complaints investigator Audrey already had a surplus in her budget, but she needed to allocate those funds so that they could help her achieve her goals.
Having a plan for the extra money and making sure that the money is used according to those goals is the only way to be financially successful.
Otherwise, the money ends up being spent on the lifestyle.
I was already 32 years old before making my first family budget. Unfortunately, it usually takes a financial crisis or financial hardship for us to realize that it’s time to take control of our money. However, what I discovered was that it gave me power over my money; the improvement it made to my overall financial well-being made me a lifelong follower of having a spending plan.
In the words of The Total Money Makeover author Dave Ramsey, “You have to tell your money where to go or it will go.”
That is why, each year, the first challenge for our competitors is to know where their money is going each month. If they want to find that extra money to pay off debt or start investing, they have to make decisions about what they’re willing to live without to achieve their personal goals.
While we may think we know where our money is going, tracking it accurately gives us a better understanding of where our money is going and often explains why we find ourselves without money in the middle of the month or why we continue to rely on credit. card to get by.
The sole breadwinner, Lwandile, managed to find an additional R1,000 each month by properly tracking the family’s expenses. When Lwandile reviewed its budget, its financial advisor Theunis Prinsloo immediately identified that Lwandile was not allocating correctly.
“When I saw his budget, I knew it probably didn’t reflect actual expenses,” says Prinsloo, whose first task was for Lwandile to start collecting his vouchers when he was shopping. By capturing his slips, Lwandile was able to better track what the family was spending on groceries.
“I was so surprised how much went into snacks – our spending on snacks and condiments was more than meat and eggs,” says Lwandile, who adds that it was those daily trips to stores that were breaking the budget.
Like most of us, Lwandile or his wife would come to buy bread and go out after spending R120 on non-essentials. By staying in a department store once a month and limiting daily shopping, Lwandile can better manage her grocery bill.
Lwandile was also allocating R1 500 per month as a buffer, but that money was still being spent, however, and this was not reflected in his spending plan. He had to make sure that this amount was allocated to the items he was spending money on, as he didn’t know he was spending too much.
followed by Lwandile with his family PHOTO: leon sadiki
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Environmental enforcement officer and mother of two, Nocawe, was surprised at the difference having a single family budget for herself and her husband had made on her finances. She has already managed to create a large surplus that can be used to pay off debts and go into savings.
“We never knew it was possible. It had a positive effect on our family, ”says Nocawe, who, after reviewing the household budget with her husband, removed unnecessary insurances like credit life on her credit card and revised their funeral coverage. “We have cut back on groceries and restaurant meals, and we will have a surplus of Rand 12,000 for June.”
For newlywed Stephan, working with his advisor Zettie Everson gave the couple the opportunity to implement financial discipline early in their married life to achieve their financial goals – bad financial habits become much harder to change with the time.
“Seeing these changes has already made me very excited; it is important now to get into the habit of staying on budget. I know it won’t be easy, but I’m very excited about the changes we’ve already seen.
STEPHAN Photo: Liesl Englebrecht
- Download a budget template from the Money Makeover website at media24.shorthandstories.com/moneymakeover/#group-section-Tools-2TAmnNhdkl or use one of the many budgeting apps available.
- Go through your bank statements for the past three months to understand where and how much you’re spending so you get a realistic idea of your actual spending.
- For the next few months, take a notebook with you and write down everything you spend, as you spend. Just this awareness will see a change in the way you spend your money.