Despite South Africa being one of the leading economic powerhouses in Africa, 2019 has seen a downturn in economic growth with greater pressure being placed on the end consumer.
The added pressure has dampened consumer spending and, according to reports released by the South African Reserve Bank, has left total consumer debt figures sitting at an estimated R1.73-trillion.
While many South Africans have the best intentions at the beginning of the year to cut back on spending and try to save more, being able to take full control of their budgets can sometimes be easier said than done.
According to Vera Nagtegaal, executive head of online financial comparison website, Hippo.co.za, when it comes to saving, a written budget is essential for managing your hard-earned cash and working towards short-and-long-term goals – including paying off unnecessary debt.
“There are many common mistakes people make when it comes to budgeting, which can easily be avoided.”
It can be tricky to draw up an effective monthly budget, but experts believe that any budget is better than no budget.
Nagtegaal says that the key to fixing this is for people to analyse their situation to see where they went wrong. “Once you have identified the challenges and financial weak spots, work on improving those areas.”
Remember, your budget may not work at first and it may require a lot of adjustment.
“You’ll have to manage your expenses according to your income, and then live according to the budget you set. Don’t give up if it doesn’t work out immediately,” she advises.
Nagtegaal notes that budgeting is often considered to be an intricate process but thinks that people can sometimes make it too complicated for themselves.
“You can simplify things by making use of a budgeting app or something as simple as a notebook.”
She also suggests drawing up a personal income statement.
“If you think about it, businesses keep a tight grip on their finances by utilising various statements for the different areas, such as cash flow and expenditure statements, so why not do the same with your personal finances? You can start by comparing income statements online to familiarise yourself with the process and tools available. The more you become educated in better managing your personal finances, the better your chances at successful budgeting.”
Budgets often break down when people experience major life changes, like the birth of a child, death or divorce. This, however, is the time when planning your finances can be crucial. Nagtegaal says this would include making provision for things like medical and funeral expenses, unexpected moves, or legal expenses. Having an emergency savings fund is a great start to being able to better manage finances during major life changes.
Sticking to a budget may be a bit of a challenge for impulsive shoppers.
“Get into the habit of evaluating whether you really need an item when shopping online,” Nagtegaal says.
“Reviewing your budget will help at this moment. Consider how much the purchase could set you back.”
The same thing applies to sales. If it wasn’t something that you budgeted for in the first place, is it really something that you can afford and need?
“Your love for spoiling those close to you could also get in the way of sticking to your budget,” Nagtegaal warns.
“The only way to survive here is to make leeway for gifts you absolutely have to buy, like your child’s birthday present. There should still be limits though, so don’t overspend when you really can’t afford something.”
Consumers are urged to make use of budgeting and work towards healthier financial habits.
Nagtegaal concludes, “If your previous attempts have been unsuccessful, try again. Your budget should be tested and improved on an ongoing basis to fit your lifestyle changes and circumstances. Making your budget a priority will assist you in the long run to secure your financial future.”
ABOUT: Established in 2007, Hippo.co.za is South Africa’s leading comparison website that helps consumers save money by comparing a range of South African providers across financial products such as Car Insurance, Household Insurance, Life Insurance, Medical Aid and more. Hippo.co.za is free to use and saves consumers the time and hassle of shopping around for the best deal since the Hippo.co.za website instantly retrieves real-time quotes from the different providers using the latest Internet technology. You could save by using Hippo.co.za to compare before you buy or switch to a new provider.
Hippo.co.za makes money by simply charging its partners a fee when a customer chooses to find out more about their products. The results consumers see, and the order in which they are presented, are in no way influenced by the fee Hippo.co.za charges its partners or any other factors other than the price of the product being compared.
For more information, visit us on www.hippo.co.za, connect with Hippo.co.za on LinkedIn, http://www.linkedin.com/company/hippo-comparative-services-pty-ltd/, like us on Facebook, www.facebook.com/HippoSA, and follow us on Twitter, @Hippo_co_za, YouTube, http://www.youtube.com/user/hippocompare and Instagram https://www.instagram.com/hippo.co.za/.
Hippo Comparative Services (Pty) Ltd is an authorized financial services provider (FSP number: 16357). Terms and Conditions apply.