You are in the early stages of trying to normalise your budgeting. You have your draft budget in place, come pay day, you pay your accounts according to the budget plan. After the debits have gone through your account you still has your savings amount and other expenses of your budget like groceries money coz you cannot buy all your groceries at once. You have fruits, bread etc. still to buy continuously throughout the month. So in the end your savings and future expenses that have not been spent money still remain in your main account. And guess what? Since you have money in your main account, all you will continue doing is swiping away. So what must to can happen?
A suggestion is to open a savings account or transmission account (same thing really). This savings account should be the excess funds account (left over from budget – or also called savings). This means after you have paid your bills and calculated how much you will still need for your continuous expenses until the end of the month you must immediately transfer the excess funds to the savings account. This will help prevent you from recklessly spending money from your main account just because you can see you still have excess funds. It will also help make sure that you try very hard to stick to your budget because any overspending will lead to a zero balance in your main account. Once you reach a zero balance THEN you know that you have not stuck to your budget. Corrective measures should be put in place. Also if your budget already has an savings amount, this is the amount you transfer to your savings account.
This is the whole purpose of the transmission/savings account – to highlight any overspending in you budget and also start as your savings nest. Even if you reach a zero balance in your main account, you can still use the funds in your transmission/savings account BUT remember that whenever you start accessing finds from your transmission/savings account it means that for the current budget month, you have failed on your budgeting. It means on the next budget month, you should try harder to stick to your budget.
Remember, you still have access to your transmission/savings account and can use it at any time. For a budgeting beginner, it is my hope that you start using the transmission/savings account as your savings account. Savings account as in saving at least 10% of your monthly salary into the account as per Oprah’s Budget Plan guide. The balance of your savings account should gradually start increasing R1000 … R5000 … R10 000 … R50 000 … Slowly but surely. Rome was not built in one day nor was wealth.
As soon as your Savings Account balance starts getting over R10 000, you should start looking at the next step, Step 06: Save 3 – 6 Months Salary. (click link)
I have to admit that writing this particular segment was kinda difficult, also, it might appear to be difficult to understand the concept. I have tried to put across the concept as best as can be. Remember, if you understand what i’m trying to put across and you think it makes some sense and could work for you then TRY it. It might work for you then again it might not. Find strategies that will work for you. Good luck.
Currently there is a new thought doing the rounds, that your savings account should actually be with a different bank and not be same bank as your main account so as to make it difficult to transfer funds immediately for use in the event you fell tempted to use your savings funds. Coz if your savings account and main account are same bank and linked, its easy to transfer funds from one account to the other or even use the money from either account as they can be linked card wise. My opinion is different bank or not, you still have access to the funds. Rather work on your budgeting and get into the healthy habit of saving!!