Planning for retirement is easier said than done, especially as consumers are bombarded with countless products. And while a selection of such is essential to safeguarding any future, the process of budgeting is key to making this possible. SW, the blogger who’s seeking to retire by the time he’s 40 years old, puts together 8 tips to making this process more doable. Simple, yet often overlooked. – Stuart Lowman
From SW
Here are some of the Stealthy Wealth blog’s thoughts and tips on budgets.
1. I like to make sure that there is always between R500 and R1 000 left over at the end of each month (after all expenses and regular investments). This is because sometimes something unforeseen happens, and our good friend Murphy says this will always happen towards the end of the month when you have 0 in your bank account.
Then you have to use the credit card or borrow money – both of which I hate doing. So don’t invest/spend every last cent, always try leave a little wriggle room.
2. f you have a negative Available value it means that your expenses are more than your income (and this before any savings/investments can be made). This is not the end of the world, and it can be fixed, but you have to act immediately! The good news is you have all your expenses in front of you now and you should immediately look to cut what you do not need, and reduce what you can. I will visit this topic in more detail soon.3. Attack your Optional Expenses first. There are some “easy wins” to saving money. For example, check what happens when you eliminate your DSTV, or gym contract. Do you really need cellphone insurance?4.Your Fixed Expenses are fixed in the sense that they need to be paid every month, but this doesn’t mean they can’t be reduced. LED globes can reduce your electricity. Do you really need a gold coloured bank card instead of a silver one? Time to revisit your insurance?5. Do not look at any investment amounts until you have paid off your car, credit card and any store cards. These expenses MUST be eliminated A.S.A.P. They are a massive drain on your finances.6. Try to smooth out big expenses. For example instead of having a big car service payment every year I prefer save about R200 every month.Then when the service arrives I have enough saved up to not disrupt that month’s budget. If you know you have a destination wedding coming up, start putting away some money every month, so by the time the event arrives your monthly budget can just continue as usual. I usually allocate money every month for Car Services, and upcoming holidays.7. For some expenses which fluctuate monthly, for example electricity, I like to allocate a value that is higher than what the actual value is likely to be. For example if the most that my monthly electricity has been in the past is say R507, then I make the monthly electricity amount R600 in my budget. This way I normally end up with a little extra at the end of the month, or worst case if the electricity is that high then at least I have it covered.8. If there is any money left over at the end of the month, then you have done well (yay for you!). But that doesn’t mean you should be spending it. Instead why not add it to your Investments, or use it to pay off short term debt, or if that’s taken care of throw it into your bond.- SW is the pseudonym of a South African blogger with a mission to save enough money to be able to stop working at the end of 2030.
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