No nonsense way to Budgeting: The Roadmap to Financial Well-Being

“A budget is telling your money where to go instead of wondering where it went.” – John C. Maxwell. He is a phenomenal leadership guru who could not have said it better. The budget never leaves you wondering what happened or trying to figure out what happened.

However, this road map (budgeting tool/spending planner) to financial well-being is the answer to our financial problems, and there is no way around it or a way to avoid it if you are really serious about reaching your financial goals.

I will be showing you how to appreciate this wonderful tool and what it can do for you to achieve your own financial well-being.

I am not so sure why people cringe at the thought of using this tool that helps one to manage money coming in and money leaving your bank account. It is mind-boggling.

“I cheated on my fears, broke up with my doubts, engaged with my Faith, and now I am marrying my Dreams – The quality of your thinking determines the quality of your Life” – Bernard Shaw.

It begs the question of who controls your financial destiny; it is YOU, and if you know where you want to go, you can get there. Budgeting is a useful and effective tool that anyone can use, anytime, anywhere to achieve their financial goals. 

It offers transparency and helps you organize your thoughts, and actions, so you can manage your month-to-month expenses, financial savings, and debt to your advantage much more easily. It never lies, it tells you a story of how you manage your resources (money).

• Understand where all your Dollars/Rands (other currencies as well) and cents go

• Help you save and invest for you, your family, and your cherished one’s financial future

• Getting out of excessive debt and constructing monetary wealth and freedom for yourself and your future generations

This is a kicker. We pay very close attention to our esteemed South African Financial Minister’s Budget speech, twice, each and every year; yet we seldom put it into practice and we criticize that it never or no longer works or it no longer goes some distance sufficiently, yet it is exactly this lack of transparency and accountability that we avoid going through as to deal with our own “skeletons in the closet.” If we don’t, then who will?

If we are waiting for our government officers to be held accountable and transparent and supply services to a range of communities with diligence, should we not be the first to be held accountable to ourselves and loved ones and practice what we expect and preach? It makes you think, doesn’t it?

Firstly, take this quick litmus test to see if you are in control of your personal finances and managing your money well by knowing exactly where your goes every month.

Question/Quizzes	Yes	No
Do you know and understand your Payslip/Paystub and Bank Statement?
Do you know exactly how much you earn?
Do you know and understand the total amount of deductions on your payslip?
Do you know how the Unemployment Insurance Fund (UIF) deduction is calculated?
Do you know and understand how your employer has calculated and deducted the correct amount of tax, medical aid, pension, or provident fund?
Do you know and understand other non-obligatory ad hoc deductions, such as but not limited to premiums on policies, parking, canteen, union fees, and garnishee order?
Do you know exactly how much money your employer pays over into your bank account every month?
Do you tear up your ATM slip without looking at the balance?
Do you have less than 10% of your salary left each month?
Do you work to a monthly budget (spending planner)?
Do you know and can you track how much you spend each month?
Do you keep a record of your monthly expenses each month?
Do you know exactly how much money you owe (debt) each month?
Do you do your own budget (spending planner) and try to stick to it each month? If not why not?
Do you have a credit card/overdraft?
Have you ever been tempted to cut up your credit card?
Do you have a nest egg for unforeseen expenses such as emergency medical surgery or a sudden loss of income?
Do you rely on an overdraft/credit card for your household purchases, including basic living costs such as groceries, and other debt payments?
Do you often buy on credit when you purchase furniture, appliances, or a cell phone?
Are you guilty of making impulse purchases without considering your cash flow?

Results:

Less than 3 YES; No control over your personal finances (Need help/intervention)

More than 4-10 YES; You show some understanding (Need improvement)

More than 10-20 YES; You’re in full control of your finances (Keep it up and keep innovating)!

Normally, the budget has a terrible connotation in many people’s minds and lives as it creates stress and low self-belief in coping with non-public finances; due to the fact that if it does not work out, it increases tension and results in failure.

We recommend you check out the Budget Workbook as a starting point, which offers basic fundamental principles of budgeting that will allow any person to be comfortable and develop confidence without being overwhelmed by numbers. Also, discover possibilities and opportunities as a substitute instead of being limited by what is available.

I would recommend you use the Preference Lifestyle Spending Planner (download a copy below) as is, as it clearly shows you and gives details of how it splits expenses, financial savings, investments, and debt into various categories. We recommend that you use the breakdown below because it meets and strictly adheres to fairly balanced money management principles:

40% Fixed costs (household spent- eg. Food, Electricity, Clothes, School fees, Transport)

25% Financial offerings long-term goals (eg. Retirement, Pension/Preservation Fund, Funeral cover, Medical cover, Unit trust, Mutual funds, Stocks, Real Estate )

25% Savings short-term goals (eg. Emergency fund, Savings Account, Call Account)

10% Debt goals (eg. Car payments, Personal loans, Credit cards, House Loan/Mortgage, overdraft facilities)

To help minimize expenses (outflows) into a few manageable classes that will allocate your income (inflows) easily:

When you work out how much you have (net income after tax), it breaks down and works out in the following way:

• How much do you currently spend (household),

• How much of it do you keep (savings and investments)

• How much do you owe (debt) and

• How much you keep in the direction of financial services desires (unpredictable and unplanned conditions such as death, accident, medical expenses) just to mention a few.

When you work out how much you presently spend, then use the Budget Workbook tool to also include:

• Fixed expenses (pay each month and regularly – e.g. rent, car, house payments

• Variable expenses (pay every month however they change – e.g. groceries, electricity, transport)

• Irregular expenses (only take place each now and then – e.g. holiday, birthday, Unplanned medical expenses)

• Include ALL Debt in your planner

Once the budgeting exercise is completed, the balancing line will come to be really seen. The place you are balancing the books is either positive(black) or negative(red).

You’ll have to face the facts and be realistic about your spending patterns and put plans in place, either to increase (earn additional income) or cut down on spending or manage your debt so that you can balance the books and return to a nice healthy bottom line.

7 Budget_spending tips that will help you stay out of your financial woes

• Be sensible about your spending planner (be more straightforward and honest) about how much you earn, how you decide to spend your income and where and how you spend it, and with whom, and be disciplined about your spending patterns and your money

• Needs vs Wants: Differentiate and prioritize between wishes and wants, so that you spend on necessary simple desires such as meals and water, a roof over your head, simple health care and hygiene, and clothes on your back (comfortable and quality dressing and not fancy famous manufacturer brand labels)

• Everything past this, a massive 4×4 or fancy SUV vehicle or triple story house, manufacturer (brand labels) clothing names, fancy and steeply-priced meals, and drinks is a “figment of our imagination” and let us be straightforward here, it is a want, due to the fact you can’t come up with the cash for it right away, let alone hold it; otherwise, why do you charge it to your credit card or take out a loan to pay for it, then?

• Impulsive or unplanned spending is driven by user needs or wishes or competition that only resides in our hearts (emotions) and no longer our heads (reasoning), these movements can have dire spending consequences (constraints) that should arise as you sacrifice your fundamental basic need for unnecessary wants, thus, it is absolutely necessary and important to make properly decisive steps to reach informed decisions.

• Review your spending patterns regularly (ultimately balancing the books) as your needs and wishes grow or circumstances change while going through a challenging or difficult time in your life (ebbs and flows we all do).

• Make it a routine to evaluate your spending patterns using the Budget workbook tool in a pretty simple way and keep track to ensure that “the money went to the exact place you said/planned it must go” to avoid costly mistakes or surprises.

• Forgive yourself ( do not panic), we are all human, you’ll probably not get it right to get your books to balance as you planned, the first time; consequently, do not keep a grudge against yourself for not achieving your financial desires and goals as planned. Just like Life, it never moves in a straight line. There are always obstacles along the way that must be overcome.

However, please do not misunderstand and misquote me. It does not imply that you should not enjoy life; rather, life must be lived in moderation and within balance.

Of course, treat yourself to life’s indulgences and luxuries now and then, but do it all in a balanced way that you can AFFORD (frugal but not cheap-within reason). There is no need to compete with the Khumalo’s or the Jone’s.

6 Benefits of managing your Budgeting_Spending patterns

• You can clearly see in black and white whether or not, you no longer spend extra or much less than you earn.

• Having a preference spending planner (download the copy below) in front of you, helps you to recognize almost at once and become aware of what, how, where, and with whom you’re spending and things you shouldn’t be doing.

• It helps you get a better and clear overview and grasp how you are doing overtime in the long run, as you can extend your columns in your spreadsheet to cover a year.

• By often looking at your spending plan, you get an experience of relief and pleasure that all that needs to be taken care of, has been taken care of – yours and your cherished one’s future; so you can plan and live with confidence.

• It helps every person in particular household contributors (family and kids) to come to an equal level of grasp because anyone is allowed to take part and be involved in the method of reaching an informed decision.

• Creating a preference spending planner (download a copy below) helps you get prepared financially and assists in being prepared for what is going to be required to make it happen or work

How to use the tool effectively?

Use the tool and see this as a new dawn, a second chance, an opportunity, to try again and see it as a treasured gift or lesson to be learned and have a great time while doing it. Surely, the milestones achieved consequently far outweigh the delay, the grudge, or the chore that you once felt and experienced.

As the famous saying goes, ”You can’t effectively manipulate (manage) what you can’t measure,” so to correctly control and manage your money (income), you want to be clear about exactly what your household income is. If you are a single Mom or Dad or a Grandparent then it will be a single income after-tax and deductions.

If you have a partner (spouse), your household income is the combined income (after taxes and deductions) of all the humans living in your family home, as well as the number of available resources (money) for spending, saving, investing, and debt.

When calculating family income, bear in mind to include all different sources of income; e.g., your partner’s income after tax and deductions, more If you are a single mom, if there is income for maintenance payments, baby grants, disability payments, or monthly pension, as well as income profits from lodgers (Granny’s flat-spare rooms), sideline hustles or interest businesses (e.g., selling arts and crafts online, baking cookies and cakes), owning a spare car using it as an Uber or taxi, running a tuck shop; tell it all and everything. Using your bank account; you can then calculate your family’s income above.

Understanding and calculating Total Household Income and undertaking the preference spending planner procedure is essential, especially if the household is thinking about their financial future, savings, shopping for big-ticket items such as a vehicle or a home, or enrolling teenagers through college, university, or higher education or any other monetary decision.

You can use the Preference Spending Planner (download the copy below) for your family household expenses and debt repayments by categories over a duration of 12 months, doing it on a month-to-month basis to see how far you have come.

Conclusion

In the end, it comes down to appreciation and knowing (being comfortable and confident) how much money is coming in (inflows) and how much is going out (outflows), and how much is saved, invested, and taking advantage of compounded interest over a period of time.

In the final analysis, it is now not how much you earn, but how much of it you get to keep so that you can grow your wealth and ride the economic freedom wave, so it is possible with monetary astuteness and basic economic planning and discipline.

I am offering a 30-minute FREE 1-on-1 session to master the basic overview of budgeting principles and examine your financial mindset. You may qualify to enroll in a Money Management Bootcamp course.

Book your call today for a FREE 30-minute session!

We also offer one-on-one coaching sessions (1-2 hours), where we dive deeper and painstakingly go through every line item with a fine-tooth comb to understand the background and the intentions of your spending pattern. It will help to clarify your concepts, thought patterns, as well as your behavior.

Download the Spending Planner and start managing your spending patterns better

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