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Budget Vs Reality

Budgeting: Expectations versus Reality
By: Kgopotso Kgwedi

“Oh, my goodness, I really appreciate my parents.” These were the words that came to mind when I came to realise the amount of financial decisions my parents had to make daily to keep our family finances balanced. I thought my parents were always telling us “No!” to everything we as children thought were necessities to live because they just did not like us much. It was only years later that I realised what we wanted was not in the budget.
My first year of university, I got a real bite of reality. I had to start budgeting for the first time in my life. It was then I truly saw the importance of learning financial literacy from a young age. Here I was in a new chapter of my life and I lacked the knowledge and skills I would need for the rest of my lifetime. My expectations of what a budget was, and the reality were at odds and what a steep learning curve it was.

The Expectations

What I knew was that a budget is essentially an ever-evolving physical picture of what your money is doing. I gleaned that a budget reflects all the goals to be achieve over the short- and long-term periods. It comes with a lifetime guarantee and is the starting point to ultimately reaching financial freedom. The rule is simple: live within your means. Spending money you do not have on things you do not need will set you back months or even years because more and more of your income will have to go toward paying your ‘unexpected’ expenses or debt.

The Execution

Abiding by the 50/30/20 rule was the obvious choice. It would help precisely guide how and where my money was going on a monthly basis. This rule works as follows: 50% of one’s income should go towards necessities like housing, bills and food; 30% towards paying off debt and growing one’s retirement fund; and 20% towards the financial goals set such as investing or going on that holiday of your dreams. It isn’t that complicated when you think about it but once you are out in the real world, it is no picnic.

The Reality

There are so many distractions both on and offline that further aggravate our fear of missing out on that sale that will only come back around next year. The reality of it is that you must carefully choose what you should miss out on in order to afford the important things. Sometimes your budget will feel like that parent who always tells you what not to do with your money, but you need to remember why you are not impulse buying at every turn.

Keeping Track

Keeping track of your spending on a biweekly basis will help you see where you currently stand while giving you the chance to fix the numbers while you still can. Remember, a budget is essentially a physical picture of what your money is doing. You need to first know what the picture of your finances looks like for you to make the necessary changes needed to have the budget work for you. A budget leads to saving and investing and paying off debt faster. It may seem hard at first, but once you have the hang of it your budget can be the financial saviour you didn’t know you were searching for.

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We don’t promise to make them rich but we do promise to keep them rich

Kathryn Main

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