How to keep track of your personal finances

A thorough grasp of your monthly costs and expenses is key to understanding where and how you need to adjust your spending to align with a more sustainable budget. You’ll get this through: Creating a budget outlining income and expenses Using apps or spreadsheets for tracking expenses Setting financial goals and monitoring progress regularly Reviewing bank statements and credit reports monthly Automating bill payments and savings contributions for efficiency

How do I draft a budget plan?

List all your income sources Categorise your expenses (fixed and variable) Allocate funds for necessities, savings and discretionary or ad-hoc spending Review your budget regularly and adjust as necessary Stay disciplined to reach your savings goals

How can I manage my money better? The key rules

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In this episode, we dive into budgeting and discuss how to manage your money better. Our expert guests, seasoned Investec financial advisor Kgomotso Motlaung and leading financial consumer journalist Maya Fisher-French, share their insights on budgeting and offer practical tips to help you take control of your finances.

Creating a realistic monthly budget that tracks your income and spending is important to reaching long-term savings and investment milestones. Not only does it help manage your finances, but it also lays the groundwork for future wealth and prosperity. Sticking to a budget keeps your lifestyle in check, minimises debt and grows your savings – leading to reduced stress, security and the ability to aim for higher financial and personal goals.

1. Don’t wait to start saving

Save as much as you can, as early as you can. By starting small, you not only build discipline and an efficient savings habit, but you’ll benefit from compound interest. This compounding effect allows you to earn far more on these early saving and investments, which can prove invaluable in building your long-term wealth.

2. Avoid unnecessary debt

Before taking on any debt to fund your lifestyle purchases, consider how the asset you want to finance adds real value to your life. It’s far better to save until you have enough money to purchase the item in cash, as this will avoid the high-interest loans of credit facilities. And remember, just because you are offered debt doesn’t mean you should take it.

3. Be disciplined

Realising the importance of money management and a ‘save-first’ mindset takes a lot of discipline. Ensure expenses never exceed your income and form a detailed understanding of how you spend your money each month. Be especially mindful of those small but frequent purchases punctuating the month. You’ll be surprised at how much these can add up to each month (this is money you could have saved). Try to avoid those instant gratification purchases to favour expenditure that can lead to income generation.

4. What is the 50/30/20 rule?

The 50/30/20 rule is a budgeting guideline where 50% of your income goes to necessities, 30% to discretionary spending and 20% to savings and debt repayment. It may help manage finances by ensuring balanced spending and saving habits. It is important to regularly review and update your budget.

5. Define your goals through your life plan

Knowing what your goals are will help you crystallise a financial plan of what you need to do to fund them. This isn’t just around income milestones. Financial planning should also include investing in a diverse investment portfolio that will support these goals at various stages in your life. It is important to understand where you are in your wealth journey and use your budget as a tool to guide you to where you need to be in the future.

6. Start an emergency fund

Smarter financial decisions in the early years of your career and your life increases your personal capacity to weather future financial burdens. Perhaps some of these are already on the horizon: a family, education, a home. Others can appear with little warning at all, like medical bills, repairs to your car or a family emergency. It is a good idea to create an emergency fund that can cushion the financial blow of these unexpected future costs. If you have additional income streams and side hustles, you should save as much of this money as possible for this reserve fund.

Must knows

In a nutshell

To improve your money management skills, you need to:

Educate yourself on the financial basics
Track your spending to identify patterns
Create and follow a detailed budget
Set clear, achievable financial goals
Use financial apps for better tracking and planning
Build an emergency fund
Seek advice from financial professionals if necessary

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