Budgeting for success: align your spending with your savings goals

A budget isn’t just a list of numbers; it’s a powerful reflection of your values and priorities. Imagine waking up each day knowing that your spending aligns with your dreams − whether that’s saving for a dream holiday, investing in your future, or simply enjoying life without financial stress.

This month, let’s embark on a journey of financial self-care. It’s time to review, prune and redirect your finances so that your budget becomes a tool for empowerment rather than a restriction.

Get started by understanding your income: If you have a fixed salary, review your payslip to see what’s deducted for taxes, medical aid, and pension or provident contributions. If you have irregular income, calculate the average from the last few months to see what you typically earn.

Remember, if your salary is received after deductions for medical aid, pension or provident fund contributions, you need to add those amounts back in and allocate them accordingly.

Give it some thought: Does your spending reflect your values? If you love traveling, are you saving for a holiday? If security is important, are you saving for retirement or an emergency fund?, Instead of thinking about budgeting as a restriction, think of it as a way to support what really matters to you.

Next, set your priorities for the year ahead. If you’re unsure of where to start, the 50/30/20 rule is a helpful guide. Use it to allocate percentages to your spending buckets:

• 50% for Today’s essentials
• 30% for Today’s play
• 20% for Future You savings

Be kind to yourself; no one is perfect. Change the percentages to match your lifestyle and work on making small improvements. You can find ways to make your budget meet your values, which will create more alignment.

Your future self will appreciate the investments you make today for a better tomorrow.

Check with your employer about pension or provident fund options. They may match your contributions at a certain level. Take advantage of this - it’s money for nothing.

If you’re self-employed, consider starting or adding to a retirement annuity. If you are behind in retirement savings, you can give them a boost by adding to an annuity and reinvesting your tax refund in a tax-free savings account.

High-interest debt, such as store cards, credit cards, and personal loans, can be overwhelming. It's important to pay it off as quickly as possible. Start by targeting the debt with the highest interest rate first, and make extra payments whenever you can. This approach will help you reduce the overall cost of borrowing and achieve financial freedom more swiftly.

Life happens. Cars break down, pets get sick, phones die. An emergency fund is your financial safety net. Aim to save enough for 3-6 months’ worth of expenses. Start small and build up gradually. Even as a high earner, it's wise to keep a robust emergency fund to cushion against unexpected financial shocks. Remember our brains focus on threats first: if we remove the threat of financial vulnerability, we can use our energy for higher order goals, like starting a new business.

Once you’ve got the basics covered, start saving for long-term goals like buying a home or starting a business. And don’t forget fun goals like travel! Clear goals make saving easier, and setting up debit orders can help you stay disciplined. If it doesn’t feel right, change it! This financial self-care exercise will help you align your spending with what matters most to you and have a fresh start.

Your budget should be a reflection of your values and priorities – not a restriction.

In the end, budgeting isn’t just about numbers and limits; it’s about creating a life that reflects your values and aspirations. By viewing budgeting as a tool for emotional and financial freedom, you can transform your relationship with money.