The four most important things on your budget
Setting up a budget seems to be a simple task, but you’ll be surprised at how many things people tend to forget to add.
Some expenses are like second nature debit orders that, seemingly, no longer have an effect on someone’s bank account.
Obviously, this isn’t the truth and you’re still losing that money to an expense that is necessary.
Before you can approve your budget, you need to make sure that you’re covering all of your financial bases. Whether you’re comfortable with the costs or not. Everything needs to be listed and all expenses accounted for. We’ll be discussing what the four most important things on your budget (and in your life) should be. As long as you have covered these things on your budget, you’ll have an accurate depiction of your finances and be able to set budgets for other luxuries in your life.
Savings
The first thing you should be doing on payday is saving at least 10% of your salary into an untouchable savings account where it can build interest. (Not logging into your online shopping accounts.) Having a savings account is one of the most important things to budget for as it can serve as your “rainy day” fund in the case of an emergency or an unforeseen expense.
The future brings with it broken down cars, children, excessive visits to the doctor, holidays, burst geysers and sick pets among other things. And while there are insurance options to cover you for some of these things, copayments and “your request to claim has been denied” responses are still a reality. And that’s not a reality you want to find yourself in without some savings in the bank.
If you don’t already have a savings account, you need to open one and get into the habit of putting money away every month. Having a savings account will allow you to gain interest on what you put in as well, which means, at the end of the day, you’ll be accumulating more money in your account by simply transferring a savings amount every month.
Debt
The next important thing that needs to be on your budget is the monthly installments of your debt repayment. You want to be rid of any debt as soon as possible and that will only happen if you budget for it. Along with everything else you need to pay off within the month, try and push as much as you can of your budget into settling your debts.
These are temporary expenses that you can be free of sooner rather than later if you plan your budget accordingly. When you no longer have those debts to pay, you’ll feel like you’re earning a larger salary (it really can make all the difference). And that will allow you to create a new budget, save more and treat yourself.
Common debts are usually in the form of loans such as student loans, car financing, credit card debt and paying off the bond on your house. There will come a time when these expenses are no more, you just need to push through and budget smartly until you get there.
Insurance
Car and life insurance are two types of insurance everyone should have (among others but these are the most important). Many dealerships, when you finance a car, strongly encourage and include car insurance in your monthly installments, so we won’t talk too much about that. But life insurance is something that many people don’t think they can afford to budget for or, quite simply, don’t think they need.
Life insurance is there for more than peace of mind for yourself. Your partner, children, parents or dependents all need that peace of mind as well. No one wants to think about what will happen when they pass away, but the truth is that we have to at some point and rather sooner than later. Life insurance doesn’t have to be an expensive cost every month.
Find out from the company you work at if they offer life insurance to their employees and, if not, do your own research and present a recommendation for an insurance company such as African Unity Life (AUL) for example. AUL are life insurance experts when it comes to helping employers provide their employees with an affordable life insurance policy to cover them and, ultimately, their families. Doing it through your work will ensure it’s a cost you can include in your budget.
Health insurance
Health insurance is a similar expense to the above insurance policies and should also be included in the budget, especially if you don’t have a health insurance policy from your company to cover medical expenses. And with all the different types of medical insurance, there will be a plan that you can afford. These expenses are crucial for your wellbeing, so they definitely take priority in budgeting.
These are the four most important things to have on your budget before you approve and live by it. Savings, debt repayments, insurance and health. The rest of your salary can happily go to gym memberships, weekly coffees and things for the home once these things have been covered.