By Jaco Prinsloo, certified financial planner at Alexander Forbes
Have you ever bought something that you couldn’t afford, or avoided looking at your bank balance because no news is good news? If you want to better manage your money, consider taking on the challenge of a “Frugal February” to help get your finances under control.
Mindful spending
Most of us have items sitting in our cupboards. How many subscriptions do you have for services you never use, like a gym, vacation club or streaming service, unread books and unworn clothing or shoes? Such expenses are not adding any value to your life. If you relate to this, you need to consider mindful spending.
Mindful spending is a different way to focus on your income and, above all, your spending. Focusing on what matters to you, which means doing what makes you happy, regardless of whether you are a fashionista, a techie, a runner, or an avid traveller.
The concept of mindful spending is to take all the wasted money and redirect it to what makes you truly happy. This means using the money you do have to buy what is important to you and saving up on essentials. In this way, you can save towards your financial goals while still enjoying life.
Tracking budgets
Managing your money as an adult is hard and if you have children, the task becomes nearly impossible. Between your monthly home loan and rent payments, groceries and the cost of school fees, it is hard to survive the month let alone save and invest for the future. That’s why it can be a good idea to create a budget that helps you keep an eye on expenses and identify savings opportunities.
A budget, in this case, is a personal financial plan that tracks and divides your income, expenses, savings, and debt payments into categories so that you can better manage your money. Using a personal budget to control your expenses creates flexibility. You don’t have to worry about money, especially since you already know exactly how much you have, rather than holding your breath at the ATM or every time you swipe your card.
By having better control of your money you can plan for the future and have peace of mind. Whether you want to retire at age 55 or stash enough cash for a month-long Caribbean vacation, a budget can help you reach your goal.
Once you’ve identified the financial goal that you want to achieve, practise mindful spending and only spend on things you truly enjoy and save on the rest towards that goal. Therefore, a budget isn’t a constraint, but a tool that provides you with full control over your finances.
Control impulse spending
Shopping online while drinking your morning coffee is a relaxing way to start your day. But before you know it, you’ve spent the grocery money on items you don’t want but are on sale. Even normally responsible, frugal people can find themselves in debt and broke without realising how they got there.
Plastic makes it easy for you to part with your money. When it comes to controlling spending, some tricks work better than others. Sometimes, it takes more than willpower to get back on the right financial path. And if you have debt you’re trying to pay off, controlling your spending becomes even more important.
Tips to help you spend less and save more:
- Try a “no-spend day” once or twice a week where you don’t spend any money.
- Buy everything using cash.
- Know your budget.
- Unsubscribe from emailer sale and special offer alerts.
- Institute a cool-off period for items over R1 000 – give yourself 24 or 48 hours to ponder if you really need to buy them.
Frugality does not mean being bored and unhappy. Frugal living means spending your money wisely, planning how you intend to use it, and saving something every month for the future. Alexander Forbes believes that consulting a certified financial planner can help you diversify your investments to produce favourable investment outcomes even during unpredictable market conditions. This means that everyone can choose and create a plan that suits their needs. Money management is not an exact science: the right method is one you can enjoy today while saving for tomorrow.
