Managing your finances effectively starts with cutting unnecessary spending and making smarter financial decisions. Whether you’re struggling to make ends meet or looking to optimise your budget, small changes can have a big impact on your financial well-being. Annelien, a professional financial coach at BudgetFix, shares five practical strategies to help you take control of your money and build a more secure future.
1. Track Your Expenses and Identify Money Leaks
Do you ever wonder where all your money goes? The first step to cutting unnecessary spending is tracking your expenses. Many people don’t realize how small, frequent purchases—like daily takeout coffee, unused subscriptions, or impulse buys—add up over time.
Annelien’s Tip:
I will assist you in creating a budgeting process to record every expense for a month. Once you see where your money is going, you can start eliminating unnecessary costs.
Action Step:
Go through your last three months of bank statements and highlight expenses that don’t add value to your life. Cancel subscriptions, cut back on takeaways, and prioritise essential spending.
2. Differentiate Between Wants and Needs
One of the biggest challenges in budgeting is distinguishing between wants and needs. Many people justify luxury purchases as necessities, but learning to control impulse spending is key to financial stability.
Annelien’s Tip:
Before buying anything, ask yourself: Do I need this, or do I just want it? Delaying a purchase for 24 hours can help you avoid unnecessary spending.
Action Step:
Create a "wants vs. needs" list and refer to it before making purchases. If something falls into the “want” category, wait a day before deciding if you really need it.
3. Set Spending Limits for Non-Essentials
We all enjoy treating ourselves, but setting clear spending limits for non-essentials ensures you don’t overspend on unnecessary items.
Annelien’s Tip:
Budget for luxuries, but set a fixed amount. If you allocate R500 a month for entertainment, stick to it. Discipline is key to cutting unnecessary spending.
Action Step:
Use the 50/30/20 rule:
- 50% for necessities (rent, groceries, bills)
- 30% for wants (dining out, entertainment)
- 20% for savings and debt repayment
Adjust your budget based on your personal financial situation.
4. Plan Your Grocery Shopping to Avoid Overspending
Impulse buying at the grocery store is one of the easiest ways to overspend. Walking in without a plan often leads to buying unnecessary items, increasing monthly expenses.
Annelien’s Tip:
Always shop with a list and avoid shopping when you're hungry—it reduces impulse purchases and helps you stick to essentials.
Action Step:
Plan your weekly meals in advance, create a shopping list, and stick to it. Consider bulk buying non-perishables to save money in the long run.
5. Automate Your Savings Before Spending
A powerful way to cut unnecessary spending is to pay yourself first. By automating savings, you prioritise your financial goals before spending on non-essentials.
Annelien’s Tip:
Set up an automatic transfer to your savings account or a savings policy right after payday. If you never see the money in your spending account, you won’t be tempted to spend it. I can assist you in setting up this policy.
Action Step:
Schedule an automatic debit order from your main account to a savings or investment account. Even R500 a month adds up over time!