Many begin their new year with resolutions for fitness and career, but how about resolutions to improve your financial situation? Normally, when tax season rolls around, budgeting and finances step into the light with resolutions. So weather you reexamine your home budgeting in January or April, it should be at the top your list every year. It can be overwhelming and hard, but it’s always worth the effort. Unsure where to start? We offer suggestions below for a variety of milestones along the budgeting journey.
Congratulations! You’ve decided that you will get your act together this year! Contrary to popular belief, BUDGET is not a four-letter word (but DEBT is). Before you can become a budget master, you have to stem the bleeding of late fees and overdraft expenses. If you find yourself constantly experiencing setbacks from unexpected expenses, you need a budget! With some proper planning, you can anticipate “surprise” bills and plan to set aside money to cover them.
We recommend gathering all your obligatory bills (rent, electric, car payments, etc.) together into one place to track them. You should also track all income. Depending on your preferences, you can use an app, an Excel spreadsheet, or a good old-fashioned notebook. Standard Bank offers a good online calculator to help. Order your bills and deposits according to due dates and paydays, helping illustrate what needs paying before you get paid again. Once organized, you may still find yourself in the red. If this happens, good-faith conversations with your billers could result in adjustments to get back on track faster.
Perhaps you’re farther along on your journey and already have a good handle on your monthly income and expenses. Through careful organization, you pay your regular bills on time avoiding late fees and overdraft problems. You account for quarterly and annual bills by saving a portion of the expected cost each month. Kudos! But you still carry a balance on high-interest debt and have little to no emergency savings. That means you’re one bad day away from serious problems. You must practice patience though as you cannot expect to tackle both problems at once.
Money experts recommend having three to six months’ worth of basic living expenses in a safety net savings account. That’s a tall order, so don’t get discouraged. Even having $1,000 set aside will put you in a better place if an unexpected emergency happens. While paying your regular bills on time, focus on putting every extra dollar towards a savings goal. Once you reach that goal, focus paying off any payday loans, credit cards, or personal loans with high interest rates.
Budget masters regularly pay their bills and have tackled any high interest debt. You either have or are building their six-month safety net savings. And you regularly contribute to retirement investment accounts. The higher the master, the less time each month you should take focusing on your budget. Automating any recurring bills, transfers into emergency savings, or investment contributions gives you back time and energy.
To master the financial force, you harness the full power of forethought. For every “unexpected” expense, a budget master will see them coming. For example, every year when you get your car inspected, you usually need new brakes and tires. If you own an older vehicle, you can expect it to need repairs now and again. You plan for these not-so-surprising-after-all expenses by creating a vehicle maintenance budget. Suddenly you no longer find yourself scrambling to cover those costs… or putting the bill on a credit card.
Becoming a budget master won’t happen overnight, but the best time to focus on home budgeting for the year is now. No matter where you are in your journey to financial health, the experts at Standard Bank can help! Stop by your local branch to learn more or speak with one of our professionals.