Keep track of your money
Spending versus income is one of the basic concepts of personal finance. If you are spending more that you earn, and / or you are constantly seeking new lines of credit to pay for your everyday expenses and existing debt – then you could have a problem.
Unlikely as it sounds, many people are not aware of how much they truly earn or spend. To get a better idea of your spending versus income, make the effort to track it, write it down and then dissect it.
Income: Review your payslip
Some people have been with a company for so long, that they no longer have any idea what their gross (before deduction) salary, or their nett (after deduction) salary is. They also have no idea how much is being deducted, and for what.
Now , is as good a time as any – to review your payslip (the physical or electronic one) and get a solid idea of how much money you have available to spend on necessities, debt and luxuries every month.
Expenses: Get all your till slips together and write it down
Often it is not the “big spend” items which see us lose our way – but rather the everyday “small spends” which we fail to keep track of. It will do you good to physically get a notebook in which to write down all your daily expenses – even if it just for one month. This will at least give you a better idea of your overall spending.
- Write down how much you spend on chips and cooldrink at work everyday, how much you spend at the spaza shop for bread, milk and essentials and even include the change (in coins) that you give your child to take to school.
Split your expenses
Once you have written down all your daily expenses, add your other expenses. To get the best results for this exercise, create categories for your various expenses.
- Fixed expenses: These are expenses that remain constant from month to month, like rent, bond, insurance premiums and set payments.
- Variable expenses: These are expenses that vary in amount from month to month. The best examples of these would be groceries, utilities, and daily expenses for work or leisure.
- Periodic expenses: These expenses may be fixed or variable, however they are separated as they are paid on a less regular basis. This could be done quarterly, every six months or even yearly. Items that fall in this bracket include school fees, taxes and some insurance premiums.
- Debt: Your monthly debt repayments may vary, but must still be paid every month.
- Non– essential / luxuries: You have to be completely honest with yourself when making a note of these types of expenses. Denial about how much you spend on non- essentials if most often what leads to household budgets not working out.
Once you have a true reflection of your income and expenses – you can identify where the problem areas lie in your household finances.
Should you find that your expenses are more than your income and/ or your are taking from your money assigned to necessities to make debt repayments – then you might be in need of a debt option like NCR regulated debt review. National Debt Advisors has been voted the best debt counselling company to offer debt review in South Africa. Fill out the contact form and we will respond to you as soon as possible.