Is there too much month left at the end of your money? Here’s a better plan for managing your finances…
Is there too much month left at the end of your money? Are you battling to save all the spending inbetween? Do you lie awake at night, wondering what you’ll do when you finally win the Lotto? Here’s a better plan for managing your finances.
Denial is not just a river in Egypt, they say, and it’s certainly a river that ran through my personal finance for quite some time. I think it’s quite easy in our consumer-driven society to be sucked into that ‘I want it all, and I want it now’ way of thinking, and if you’re not careful you can end up in deep trouble.
Of course, because I’m a braggy sort, I like to tell people, loftily that the only debt I have is my home loan. And then I remember that I have a small personal loan. Oh, and an overdraft… oops! And then I realise I have altogether more debt than I’d planned to have when I became a breadwinner a few years ago, which was just the home loan.
Being the breadwinner ain’t for sissies
I have spent many a sleepless night turning over numbers in my mind and wondering how I’m going to afford this or that, because no matter how well you plan, somehow the universe always conspires to send you an unforeseen expense when you can least afford it.
And I’ve found that, no matter how hard I work, or how much I manage to earn, I never quite feel like I’m on top of things. Clearly a lot more goes out than I budget for, but I’m damned if I can figure out what I’m spending it on – because as a self-employed writer whose income fluctuates wildly, I really have to be. The feast months are great, but like winter, the famine months are coming.
A while back I read a magazine article about money tracking apps, so I thought I’d try one out and see if I could figure out where I was overspending. I installed a little app called Money Lover, and it was a really great leak detector. It was quite a surprise to see how much money went on things like parking, coffees out, food grabbed on the run, and so on.
There was more wastage than I realised, and on things that weren’t really important or even necessary. And when you see how small amounts start to add up, you realise how often you overspend because something is ‘just’ R20. Five of those occasions, however, and you’re R100 down.
Earn more, spend less
I think what it boils down to is remembering that there are only two ways to gain more disposable income apart from investing – I’m talking about day-to-day expenses here. And those two ways are earn more, and spend less. Okay, maybe three, if you win the Lotto – which I will be doing soon, in case you’re wondering. I plan to win R23-million – that feels like the right number to me.
But while I wait for my numbers to come up, I’ve drawn up a bit of a personal manifesto for 2018 to get my money under control. That means exercising not just discipline, but honesty with myself about my financial situation.
In no particular order then, here are the basic tenets of my money manifesto for this year:
- I will try to fix broken things before I replace them – or have them fixed. We can learn from the generation that came before us in this respect.
- I will emphasise maintenance to save on disaster management – whether it’s my car, my house, my computer or myself. Prevention is better than cure, and usually a whole lot cheaper. No more tolerating small irritations because I can’t be bothered to sort them out.
- I will pay off my debt systematically – I’ll start by adding a little extra to the loan repayments till they’re gone, then taking that total amount into my overdraft, and then, when that’s gone, the payments go into my home loan to try and pay that off faster.
- I will maintain my capsule wardrobe philosophy ? I pared down my wardrobe about a year ago, and find that I now have more outfits than ever. I don’t strictly keep to 21 items, or 35, or whichever number the capsule wardrobe aficionados recommend, but I adhere to the philosophy of fewer clothes of good quality, and a handful of classic staples rather than bulging cupboards full of clothes I don’t wear.
- If I can’t afford it with cash, I can’t afford it? and I’ll just have to find a way to put the cash aside until I do, or earn it. I’m a resourceful sort: I’ll find a way.
- I pay the taxman and myself first – which is something I’m quite good at. I do squirrel away funds as soon as my payments arrive, and I put a bit away into an emergency fund in case of any disasters.
- I will not dip into the tax or emergency funds for fripperies – which is always the temptation. I have succumbed a few times. It stops here.
- I will remember that experiences last longer than things – especially when it comes to home and garden décor items, which are my weaknesses. I need to curb my enthusiasm in homeware and hardware stores in particular, and I’d much rather be saving up to travel somewhere.
- I will continue to eat in – because it’s healthier as well as being a whole lot cheaper. I’m not buying anything I can’t make at home, especially coffee and sandwiches!
- I will say ‘no’ to my children more often – and mean it. My kids aren’t actually very demanding at all when it comes to money, but I know that I have given them budgets on things before and then allowed them to go over budget, and that doesn’t help either them or me!
- I will reduce, reuse, recycle and upcycle as far as possible – and only when those options have been exhausted will I buy a new thing.
- I will give to those less fortunate wherever possible – because there is always someone worse off than I am, and you can look after your own financial independence without being greedy.
Article by Mandy Collins