By Winnie Kunene
For government, creating a budget isn’t just about working out how much there is to spend and trying to cut costs, it’s also about trying to work out what might happen in the near future, and plan for that.
When we – the citizens of our country – do our personal budgets, we should be in a similar mind set. We shouldn’t just look at how much we usually spend and try to find ways to spend less; instead, we should look at what life changes we are likely to make in the coming year or two and start planning financially for whatever is coming our way.
Here are some of the main things that might change in the different areas of our lives in the short to medium term that we should consider:
The Department of Home Affairs
Keeping a home – whether you rent it, pay back a bond or just maintain it – it is probably one of your biggest annual costs. Are you happy in your current home, or do you need to make alterations, renovate or move? Might you lose a housemate or gain a boyfriend? Do you need to be closer to work, or further away from your in-laws? Start looking at the costs of any changes you have planned so you can start saving for them, and don’t come up short when the time comes.
The Department of Internal Relations
Whether you are starting a family of your own, or supporting family members, you need to plan ahead. Might you move in with your partner, or have your parents moved in with you? Are you planning a baby or will you need to help out an aunt whose husband has recently passed away? All these will have an impact on your finances, so start planning now.
The Department of Education
Closely tied to the previous budget item, education is one of the biggest costs for families in South Africa at the moment. Will your children be starting or changing schools in the next couple of years. Is there enough room in your budget for fee increases? Have you started saving for text books, uniforms, outings or even iPads?
Of course, you could also be broadening your own horizons and planning to study yourself, so make sure you’ve budgeted for any academic expenses that you plan to incur in the next year or so.
The Department of Labour
Your job determines how much you earn, how much you spend and where you travel to and from every day. Any change in your employment, whether you get a promotion, change locations, leave the company or open your own business will have an impact on your finances. Be sure to consider any career changes, and budget for them.
The Department of Transport
Are you intending to buy a new car in the next year or two? Or might you trade in the expensive car that you bought on hire-purchase for something more sensible? Is there a new public transport route in your area that you could use to reduce your petrol bill? All these factors will affect your budget.
The Department of Healthcare
If you have a medical aid, you should consider whether the plan you are on is the right one for you. Keep track of your medical expenses – whether or not they are covered by your plan – so that you have a clear idea of how much you are actually spending. This way, you can be sure to make the right decision about your plan next year.
Also be sure to plan for any medical expenses – like dental treatment or annual screening procedures – that may not be covered by your medical aid. And don’t forget to budget for annual premium increases!
The Department of Finance
Consider your debt. Is it possible to pay more than the minimum repayment so that you can clear your debt faster and pay less interest? Are you likely to get into more debt in the coming years? Remember that the more you can save and the less debt you take on, the better your financial outlook will be.
Make sure that you are working towards putting in place all the savings plans and insurance products you need – short and medium term savings, an emergency fund, insurance, medical aid, investment or retirement funds –and if you aren’t yet allocating money towards these, start looking for ways to do so.
Thank you, ladies and gentlemen
We make some of our greatest financial mistakes because we assume our life will not change. Hopefully, if you’ve read through this list, you’ll have seen that your life changes constantly and that many of those changes shouldn’t surprise you.
Make sure that your budget doesn’t just reflect the state of your finances right now, but also makes an allowance for how things might look in a few months or next year. Good luck and happy budgeting.