South Africans are taking some financial strain during this Economic Recession. Not only is the recession affecting most peoples pockets but economic data has shown that it is also affecting households emotionally. I personally have felt the pinch and its not a great feeling. I began changing my methods of spending, and budgeting differently during the past two months and so far its been working great. Maybe it can help you too!
Sadly South Africa is quite indoctrinated in terms of functioning on a monthly system. But imagine if you were paid from week to week, and you paid rent from week to week too. You would begin dealing with smaller figures. Rent is one quarter of its normal, your weekly spending on food is also cut in four! I can hear you now, ‘Yeah, but at the end of the month its still 4 times that… so its all the same!’ This is true, but I could simply say to you, ‘At the end of the year its just 12 times more too!’ Imagine if you got paid once a year! Can you imagine the year end shopping rush with everyone getting paid on Christmas Day! The fact of the matter is, your finances can run away with you over a four week period so why not try to control it across smaller periods.
In reality if everyone moved over to a weekly system there would be no month end crunch. Budgeting for a week instead of a full four weeks allows you to really see and focus on the short term costs and not loose track over a longer period.
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Tips to Implement a Weekly Budget System
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1 – Get Big Costs Out the Way
We still need to deal with the fact that South Africa functions on a monthly system. Therefore get those monthly costs dealt with, pay your rent, your medical aid and retirement annuities at the beginning of the month. If you have any debt, setup a system to begin paying that off ASAP! Consider debt repayments as part of your fixed monthly costs.
2 – Pay Yourself First
As per the book Rich Dad Poor Dad, at the beginning of the month put away as much money as possible for savings. I am assuming you have calculated your monthly costs and therefore know how much you are able to put away comfortably. Over the past few months on this system I have reached an awesome 21.2% of my gross salary going into savings, that includes my retirement annuity.
3 – Loose the Credit Card, get a Debit Card
Yup, the best thing you could do right now is to get rid of your credit card! Its probably only hurting you more financially than its worth! A credit card only masks your spending, they are harder to keep track of and the system again works monthly! Break the habit ASAP!
4 – Work in Realtime
Credit cards give you a few months to pay, and you only have to pay a few days after you receive your monthly bill! I worked out that if I spent on the right day I could go for 55days without being charged any interest, before having to pay my credit card bill. This just throws the system of working monthly out the window and we are trying to achieve a weekly system! Once you have got the debit card setup stop using the credit card all together. The debit card reflects the cost of your spending onto your bank account almost immediately. It helps you to visualise and feel the cost of your spending, as you spend! That’s what I call realtime financial feedback!
5 – Cut your Months into Four
Using your monthly budget and looking at your bank balance after all your monthly costs have been removed (step 1). Divide your remaining spending by four, and then divide that figure into more specific costs like petrol, food, and entertainment costs. Entertainment costs will include food bought out at restaurants and drinks at bars. I have an exact figure every week that I am to spend on groceries, petrol and entertainment.
6 – Cash is King
Yup it is! An even more effective way to spend is with Cash… hey its accepted everywhere and chances are you get at least 4 free cash withdrawals per month from your bank! Use them wisely! Draw the exact amount of cash you need for your weekly costs. Excluding items you know you can spend on your debit card, like food from Pick ‘n Pay! I withdrawal my weekly petrol money and my weekly entertainment money on a friday night before going out! Okay I am pretty good with spending on nights out on the town, so if you’re not maybe its better to draw your money on a monday! 
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The media is beginning to claim that the recession is over! I wouldn’t get to excited though, South Africa is always a few steps behind the rest of the world. It took a few months for the recession to reach us and it will take a few more months if not years to get ourselves out of it!
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