4 Mistakes that will bust your budget

We get it: sticking to a budget is very, very hard. But the truth is that it’s necessary in order to ensure that your financial future is safe.

Sitting down to draw up a stringent monthly plan for your money is truly one of the best (and smartest) gifts you can give to your future self. Unfortunately, many of us never master the skills of budgeting because of reasons that can easily be resolved.

The most common reason why we battle to keep to our budgets is because we set unreasonable targets. We set goals that are too big to be achieved within our timeframe, and all this does is lead to frustration and defeat.

Start with easily achievable goals and be honest about your current monthly spending. You’re not expected to go from partying every weekend to only going out once a month in order to reduce your spending. Chances are, you won’t be able to follow through. Rather cut out one weekend a month or one day of each weekend.

Nitesh Patel, Head of Customer Financial Solutions, Personal Banking at Standard Bank, suggests that your next step is to identify your ‘budget busters’ – the biggest culprits responsible for derailing your budget. Once you recognise the triggers, you can work on avoiding them. Nitesh shares the four of the most common ‘budget busters’ with us, and how to avoid them.

1 Weekend blow-outs

After a hard week at work, weekends provide welcomed rest and relaxation. However, a trip to the mall will rob you of at least R500, probably much more. Add in a good night out with the girls, and that’s a further R500, give or take. If you do this every weekend, you are spending R4 000 per month. Imagine if you received a R4 000 salary increase. You’d probably be ecstatic and plan to put that money towards your retirement plan or bond. Careful budgeting can help you achieve a similar result.

2 Ignoring changes in your financial situation

Budgets should be adjusted when your financial situation changes: if you settle a bill, get a salary increase or add an expense – the outcome of your budget will change. Revise your budget monthly; you don’t have to give it a complete makeover – just spend a few minutes to make provision for anything you didn’t plan for in the previous month such as increased utility bills or petrol prices.

3 A spendthrift spouse

For your budget to successfully contribute to your financial security, you and your partner must reach an agreement on your spending and saving habits. Discuss your financial goals together, and consider making an appointment with a financial planner to get the right products in your portfolio; they will help you to design a blueprint for the future and can act as a coach to keep you on track.

4 No emergency plan

Budgeting may seem relatively easy until an unexpected expense occurs. Try to build up an emergency fund of at least three to six months’ of living expenses in case of financial emergencies. If you don’t already have a safety net, create a segment in your budget to build up one. This will give you peace of mind and stop you from having to raid your savings.

Looking for more financial advice? Here are the tips you need to make your paycheck last all month.