Budgeting in January is tough, here are a few tips even if you're deep in the red

A UK-based think tank has dubbed 2022 as ‘the year of the squeeze’ – a nod to an impending "cost-of-living catastrophe" caused by fuel, energy, transport and insurance price hikes.

“In 2022, South Africans are also going to experience a similar financial ‘squeeze’ with an assumed interest rate hike during the first quarter of the year and a looming electricity price hike of massive proportions. Navigating this squeeze in Janu-worry and beyond will take some smart money management, which starts with an ironclad budget,” says Susan Steward, spokesperson for Budget Insurance.

Here are a few tips to get your finances on track and take on the new year:

To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.

Remember, even the smallest adjustments can make a meaningful difference over the long term. Channel the extra money you have into paying off your debt faster, starting with those with the highest interest rates, first. As your debt repayments start getting smaller, you will have more and more money to allocate to your personal savings and other more worthwhile causes – such as saving for retirement planning, a deposit on a new house or a holiday.

Set a savings goal for yourself and consider saving as a non-negotiable, essential ‘expense’ on your monthly budget. Whether your goal is to put away R250 or R1000 a month, put it in your budget and stick to it.

Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on fuel and encourage your family to switch off lights in unoccupied rooms to save cutback on electricity costs. Shop around for bargains and less expensive brands… and don’t forget to use your loyalty benefits to the max.

Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.

Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your financial situation. Prioritise those with high-interest rates and ensure that you pay the minimum on your credit and store cards.

Budget offers advice for those times when you’re really in a financial jam.

“Budgeting is essential, but what if your bank balance is already in the red? There are a few ways to make cash quickly, to tide you over until you can start cutting back,” says Steward.

Clear out and sell unwanted things

Get rid of the things that you no longer need or scale down to create financial breathing room. Good options include electronics, furniture, books and clothing.

• Identify unwanted items and create a list – taking pictures of the items makes this process easier.
• Place an ad online, for example on Facebook’s Marketplace, which is free and easy to navigate. All you need is a Facebook account and you’re ready to go. Yaga is another website where you can sell second-hand clothing.
• Advertise the items’ value and be willing to negotiate or trade for other things.
• Remove sold items from your insurance inventory, which could save you extra money.

Tap into a side hustle

Making extra cash is a great way to make sure you meet all your expenses during these tough times.

Do freelance work on sites like Freelancer, PeoplePerHour or Upwork.

Tutor on apps like Cambly and Tuta-Me. Pandemic times have seen an increase in demand for good tutors, so it’s a good opportunity to earn extra income. Bear in mind that you may need to be a native English speaker or an expert in a specific subject to teach.

Monetise your craft, like photography, baking, making ornaments, painting, doing flower arrangements or your DIY skills to earn extra cash.

Everyday things and chores – many people are looking for a helping hand with running errands or transport. If you’re good at it, you may as well get paid for it.

“As your expenses and debt repayments start getting smaller, you will have more money to allocate to your personal savings. And, who knows, you also might just develop your side hustle into a full-blown business”, Steward concludes.

BUSINESS REPORT