10 Tips on managing your personal budgets

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These same people will generally lurch from one payday to the next with little regard for what they are spending their hard-earned money on and not really caring about the possibility of debt until it actually happens to them.

It is only when debt takes over a person's life and the spectre of bankruptcy looms over them that they are forced to seek guidance from a professional debt counsellor. The advantages of adopting a disciplined and budgeted approach to life will have far-reaching benefits to those who practice it and may even lead those individuals to discover something that they never thought existed in the past - a cash surplus at the end of the month.

So whether you are already in a financial mess or whether you simply want to take charge of your finances before your life becomes a mess, David Crossley, Practice Manager at BDO Wealth, provides 10 tips to secure your future financial wellbeing:

1. Prepare a monthly budget! Take all your expenses that you incur every month and subtract them from your net monthly income. Include any repayments you may be making for cars, houses and furniture etc.
   
2. List all the debts that you may have and ascertain which debt is costing you the most.
   
3. Devise a plan to repay the most expensive debts first. A typical example is a credit card which attracts stratospheric rates of interest.
   
4. If you are in the unfortunate position of having defaulted on any debt repayments, go and see the institution and admit this. They will be more than happy to reschedule your debt in the most cost effective way.
   
5. Once you have put your budget together - stick to it!
   
6. Using your budget, identify which non-essential items you can cut back on. Look at items such as DSTV (maybe a different bouquet!), garden services and even children's extra murals, if this is possible.
   
7. Use the additional money from these savings to start paying for goods and services upfront. Use any additional money derived from these savings to repay as much of your short term debt as possible.
   
8. Don't cut back in the wrong areas! Remember that things like medical aid and vehicle insurance are essentials, particularly if you have a vehicle on HP or children who will need medical attention from time to time. Retirement annuities and other policies should not be cancelled under any circumstances. Cashing in accumulated funds to service short term debt will only serve to lessen your savings goals.
   
9. Look at ways of reducing your utilities bill by installing a timer on your geyser and switching off non-essential lights and appliances.
   
10. Don't panic! Seek out a qualified financial planner who will be only too pleased to assist you to budget and to plan.
    

Discipline is an essential factor in managing your personal budget, but once you have persevered with this process for a few months, you will be amazed at the control you will achieve over your income and spending habits.