Successfully managing a budget also means knowing how to deal with the inevitable splurge. Here's how to get your budget back on track.
Christmas has barely gone past and we're already staring down another period of splurging.
Let’s be honest - most of us have yet to recover from having our finely-tuned budget thrown off by the last shopping frenzy.
Don’t give up yet; here are some simple ways to get your budget back in shape (after all the festivities are done).
Work Out Your Shortfall
How much did you mean to save this month? If you intend to save S$3,000 in February, but end up saving only S$1,200, then you've missed your target by S$1,800.
The point of having a concrete number in mind is so you can have a solid point from which to start planning a budget recovery.
Afterall, you can’t fix damage if you don’t know where it is!
Spread Out Your Recovery
It’s improbable that you can make up for the lost savings all at once (if you could save that much more in a month, that’s what you should be doing!)
Instead, from next month onwards, aim to ramp up your savings by another 10 per cent, until you make up the difference.
If you usually save S$3,000 a month, you should set aside S$3,300 a month instead, for the next six months; by then, the extra S$300 a month would have made up for the excess S$1,800.
By slowly making up the difference, you can fix the budget without feeling the big sting in your lifestyle.
Reduce Your Interest on Your Debt
If you have outstanding balances on your credit card, make good on them quick. At 26 per cent (or so) per annum, the repayments can seriously damage your financial plans.
Find a low-interest personal loan, which ranges between six and nine per cent per annum. There may even be zero interest loans (aka balance transfers), which give you a fixed period (typically six months) to repay the debt without any interest charges.
The idea is to pay your high-interest credit card debt, with a low-interest personal loan or balance transfer. This gives you the chance to pay off your debts without getting bogged down by expensive interest charges.
Important: Don’t start accumulating debt on your credit card again! If you feel tempted to buy on credit, then cancel your credit card right after you’ve repaid it with the personal loan. You can use a credit card again later, when the personal loan is paid off.
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Review Your Automated Payments
Check for any automated billing, such as gym memberships or unused cable TV channels. Eliminate these to improve your cash flow - and remember, it’s just temporary. You can have them back once your budgetary damage is fixed.
Sell Stuff You’re Never Going to Use
Be honest with yourself. How many of the gifts you’ve received in the past year are, well, useless to you? If you’re never going to use that expensive robot vacuum cleaner, or can’t think of why you need a drone, then sell it.
Sites like Ebay and Carousell make selling your unwanted items easy - and if you’re in luck, simply selling the gifts will make up for the hole in your budget. Just don’t let the gift-giver know about it.
Go Healthy and Eat Home-cooked for a While
This will help your wallet recover from excess spending, and your body recover from excess eating (the inevitable aftermath of Chinese New Year). It’s easier to plan for healthy meals when you cook yourself - and by refusing to eat out, you’ll save money.
Just restrain yourself for a month or three, and you’ll be ready to indulge again soon - both in wallet and in health!
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