How to manage your money in the New Year

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Photo: Getty Images/Gallo Images
Photo: Getty Images/Gallo Images

 

Just as you’re getting to grips with your festive season spending, it’s already time to start thinking about the year ahead. Each new year brings a fresh opportunity to get your finances in order. New Year’s resolutions are usually made with health and social goals in mind, but why not set yourself the goal of taking better control of your finances? Here are some money resolutions you can make work for you.

DRAW UP A BUDGET

Setting up a budget is the first step towards financial order. You can download a budgeting app to keep track of your income and expenses.

SETTING UP A SUCCESSFUL BUDGET

1 Dedicate at least a few days to drawing up your budget.

2 Make a thorough list of your income and expenses. Remember to also consider less regular expenses such as school stationery, and your car and home maintenance.

3 Add up all your income, and your expenses. Also work out the percentage you put towards certain expenses by using this formula:

Specific expense/Total income x 100 = Percentage expenditure

4 Determine where you can cut expenditure to allocate more funds towards reducing liabilities and add to your savings. You should allocate about 30 % to debt, 45 % to living expenses, 5 % to insurance and 15 % towards savings. This should leave you with a surplus of 5 % for unexpected circumstances and price hikes.

5 It’s easy to stray from a budget and give up because it doesn’t reflect the reality any longer. Check your budget at least once a week to see if you are still on track. Revise your budget often to reflect your current situation and needs. See the opposite page for an example of a budget for an average household  

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