Know your spending habits

To save you need to know what you spend on. A budget cannot succeed without an understanding of where money goes. Most budgets fail because they depend on ideal situations rather than real spending habits. As you gather the information over months and years, you will get an idea of how you use or misuse money, and plan to avoid the mistakes.

    * Keep records of your spending each month. If you can use spreadsheets, you can easily track by day and type of expense, e.g. food, transport, clothes, shoes, etc
    * Make and keep a budget. Decide what fraction of your annual income you are willing to spend. Make annual projections from your monthly expenses to see whether you are on or above budget.
    * Take note of expenses that are used over several months (e.g. one term’s school fees, membership fees, vehicle service) and allocate over a month.
    * Stick closely to your budget. Early success breeds confidence. If you overspend in one category, cut back on another. If you overspend in one month, try to cut back on the next. Once you realize you can control your expenses, you can then be more relaxed.
    * If you cannot keep to a budget, financial experts say develop the habit of paying to your ‘savings’ first. This may take the form of a mortgage, regular fixed deposits, or investments. My view is if you cannot keep to your monthly budget total, see this as an early warning signal of failure to save. Go back and review my other suggestions, esp how you can reduce your wants
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