Stop Spending!

Stop Spending!


“HAVE A BUDGET!” Many finance experts have been saying this for many years and most people have more than likely had enough of hearing it.

However, creating a budget is the first step in sound financial planning. Budgeting is especially critical in difficult economic times where salaries are not increasing in line with grocery bills, petrol prices and school fees.

Remember, it’s not how much you earn, but how much you spend that causes financial distress. The points below should highlight some important reasons as to why following a budget is vital.

1) Keeps you focused

Budgeting helps keep you focused on the goal. For example, if your goal is to save R 5 000 per month, working your budget around this R 5 000 per month saving should prevent you from spending money on items that are not allocated in your budget.

You will never be able to save up for a home or car if you just spend money aimlessly without a plan.

2) You will find money that you could not account for

Budgeting should enable you to track every Rand spent and help you see where adjustments need to be made.

3) Identify bad spending habits

Building a budget forces you to take a close look at your spending habits. You may notice that you’re spending money on things you don’t need. Maybe the daily cup of coffee from the local café is actually costing you R350 per month or R4 200 per year.

4) Prevents you from spending money that you don’t have

Previously, people would live within their means as they only paid with cash. Nowadays, with debit cards and credit cards, it’s easy to overspend and get into a spiral of debt without realising it. Having a budget should help you calculate how much you can afford to spend each month.

Everyone is unique and therefore it would be best to find a budgeting system that works for you.

You could use an excel spread sheet or use the envelope system (where you have envelopes for various spending categories and the allocated money is put into these envelopes at the beginning of every month).

Just because you have a gym programme doesn’t mean that you are fit and healthy. You also need to consistently follow that gym programme.

Budgeting is exactly the same. Once the budget has been created, it now needs to be followed consistently and adjustments need to be made where necessary.

Calculate your lifetime income. This is how

Andrew Padoa
Andrew Padoa works in the Private Client’s division at Consolidated Financial Planning. His area of expertise is investments, estate planning, retirement planning and portfolio benchmarking. He has had numerous articles published in the media on a number of topics related to personal financial management. Andrew is passionate about educating people and has given several financial literacy talks to both schools and corporates. His objective is to use his abilities and knowledge to help others achieve their financial goals. Visit for more information