Managing expenses regularly is the best way to avoid debt and build savings that can accommodate planned and unplanned big purchases such as a medical emergency or holiday. While this can take time for one to master, it’s something that you must constantly do in order to get better.
Ester Ochse, Product Specialist at FNB Financial Advisory says, “the best way to manage your expenses better is to have a solid budget plan which needs to be religiously followed. The budget has to be constantly reviewed when there are changes in economic activities to ensure that your income accommodates your expenses.”
Ochse share tips on how to manage your expenses:
- Review your budget: when working on your budget for the current month, compare it with last month’s budget and identify items that you no longer need. This will help you cut unnecessary expenses and create room for you to bolster your savings or pay extra on your bond or car, for example.
- Set financial goals: one of the best ways of managing your finances and reducing expenses is to set financial goals. Making financial commitments such as cutting debt, saving for a big purchase items such as a house or a car can help you alleviate unnecessary expenses because you will be constantly be reminded about what you want to achieve.
- Avoid impulse buying: unplanned purchases can add up to a lot of money at the end of the month and in most cases they are the common cause to why people run out of money before pay day. If you find yourself in situation whereby you want to make an impulse purchase, ask yourself if you really need to make the purchase.
- Pay extra on your debt: making extra payments on your debt will help you save on interest and further pay off your debt earlier. In the case whereby there is a decrease in interest rates, it is advisable to continue paying the same amount towards the debt repayment which will further help you save more on interest and reduce your repayment term.
“Developing good money management habits takes time. But with time, patience and practice it will benefit you in the long term. If you fall behind, take it as an opportunity to review your financial circumstances and work on a plan that will help put you on the right path to developing and building on better money management practices,” concludes Ochse.