Are you a spendthrift? If you are, it means that you spend money in an extravagant or irresponsible way. If this is you, it also means that you probably won’t have any savings. You simply don’t have enough disposable income left over.
What is the disposable income? It is the amount of money that a person is left over with from their earnings after taxes, and social security payments have been deducted. It is your take-home pay that you can use to spend on the cost of living and any other purchases including any non-essential or luxury items.
2019 will be a tough year for consumers
Spending all your earnings every month is not something you should do unless you have no other choice. Unfortunately, this is the case for many South African citizens, and it spells danger. Although the amount of disposable income is gently rising, so too are the predicted cost of living figures, and the city-press.news24.com website forecasts that 2019 is going to be a tough year for SA consumers.
With inflation on the rise together with impending increases in interest rates and the fact that some utilities like water and electricity are going to be hiked, it is going to mean that those who are on the breadline right know, are likely to be staring a financial deficit in the face in the coming months.
Avoid living on credit
Some people may be tempted to get their credits cards out or apply for new ones with a view to using them to tide them over. However, this is something that ought to be avoided at all costs. Not only is it an expensive way of buying things because of the interest rates that credit card companies charge; if you continue to use them you will be building a sizeable debt.
Rather than resorting to using some form of credit, you should first be looking at ways of reducing your spending. The more disposable income you can have left over to use on “discretionary spending” the better.
“Discretion” is the critical word here. It refers to a choice, and by reviewing what you spend in this area, you can not only have enough money to pay your bills and live comfortably, but you might even be able to generate some savings.
Getting help with creating a budget
The best way of reviewing your expenditure is to create a budget. Don’t worry. If you’ve never made one out before there is plenty of help available online.
Having created your budget, it is then essential to try and work within it. If you don’t, you will end up in trouble. You must also take on board the fact that you will need to continually review your budget. This is because prices and bills can increase, and you may need to tweak your budget from time to time in order to make sure it remains current.
What to keep your savings for
But remember. Don’t just create a budget to control your spending; use it to ensure you can make regular savings too. Once you have some money set aside if you do get any unexpected bills cropping up you will have a way of dealing with them rather than allowing yourself to get into debt or having to forgo some cost of living necessities.