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Five tips to be the finance minister of your personal household budget

20 Feb 2019

Five tips to be the finance minister of your personal household budget

The Minister of Finance, Tito Mboweni, had to present one of the most challenging budgets in recent South African history. Not only did he need to reduce wastage expenditure, he also made difficult decisions to closing the existing budget deficit. Now that we've seen the steps he has taken, we need to take a serious look at our own finances too and make decisions that will impact our personal budgets.  

Just like the finance minister has to manage push back from members of parliament and the citizens of the country, the financial decisions made by the head of a household won't always satisfy everyone. However, when times are tough making difficult decisions could mean the difference between financial demise and financial success.

Be the finance minister of your personal budget

While maintaining financial wellness may seem like a difficult task under the current economic environment, small changes can make all the difference in getting you closer to your financial goals. Here are five tips to help you become the minister of finance in your personal budget.

  1. Constantly review your personal financial performance
  2. Throughout the year, the minister of finance monitors the successes and failures of various government departments and state owned enterprises. While your personal finances may not be as complicated as the national budget, you need to constantly review your monthly spending, monitor your savings and investments and set financial goals that you can work towards.

  3. Restructure your budget to reduce your monthly spending
  4. The world is constantly changing and you must be able to adapt your budget to these changes. Every time the petrol price increases, look at ways to cut down on your travel spending. When rates and taxes increase, consider ways to reduce your spending on electricity or water. Revisit your budget as often as possible during the month to monitor your spending progress. Focus on one or two sections of your budget where you can slowly, but steadily reduce your spending.

  5. Make sure that you monitor and adapt your risk cover
  6. According to Liberty Group sales director, Johan Minnie, between 8% and 10% of life policies lapse each year, 90% of these cancelations are the result of affordability. Minnie says, “When consumers face serious financial pressure, they tend to prioritise debt repayments, school fees and other expenses - all of which are important, over life assurance premiums. Unfortunately, you don’t know when you'll need this cover; that's why you need to realise that cancelling it is a serious risk."

  7. Implement a household budget speech
  8. Every year, the finance minister presents a mini budget speech and a national budget speech to keep everyone informed of any major changes and impact to the country's finances. Consider hosting a household budget speech at least twice a year. Use this time to inform your family of the financial situation and the role they play in keeping the family finances robust and healthy. The best way to get everyone on board is to keep them involved in the personal household budget. 

  9. Find a mentor to guide you on your financial journey
  10. Before the finance minister presents the national budget speech, he looks to advisers and mentors for information to help him make the right decisions for the country. Financial advisers have a similar role to play in helping you make the best decisions for you and your family. Minnie says, “Financial advisers are there to help you take control of the things that matter most in your life and to shape solutions that are aligned with your needs and circumstances. "

    Never underestimate the value of financial advice in your personal budget. Always play open cards with your financial adviser, reveal your short-, medium-, and long-term goals so that you can work together to implement a strategy that will work for you. 

This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice.  . The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Liberty Group Ltd. is a registered Long-Term Insurer, and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions apply.

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).