Finance 1
If you earn a salary every month, pay all your monthly bills, have some insurance and a few rand saved - and enjoy the occasional treat, you may feel that you are living within your income and have no need to worry. But what about those bills which come in only once or twice a year? Have you made provision for them or do you panic a bit and either raid your piggy bank or default on another payment to meet the debt? After all it's only for a month and the company won't notice a one-month's slip up, will it?
Living within your income means more than balancing your monthly income with your monthly expenses. It means having a little over every month - and saving it - to meet those quarterly or annual bills to which you currently are closing your eyes. Open your eyes and take a good look at those 'forgotten' expenses.
List your monthly expenses on one page; list your annual expenses on another. These could be costs such as car or house insurance, subscriptions to organisations such as the AA or magazines and newspapers, even getting your car serviced could come as a shock if it only happens every four or five months or so. Not to mention the need for new tyres or the sudden expiry of your battery. If your monthly income and your monthly expenditure equal each other where are you going to get the money from to pay these recurring yearly expenses?
Do you prefer to buy clothes, groceries, and toiletries on store accounts or on your credit card instead of paying in cold hard cash? It can be a slippery road to debt unless you exercise strict discipline. You might consider the benefit of using a debit card. This means you don't have the possibility of debt or a large payment to be made at the month end, but you also don't have to carry cash around in your pocket on the off chance you might want to buy something. Going on an annual holiday is also a yearly habit for many of us. Do you save towards it every month? Or do you rely on a bonus or a double cheque to take care of holiday expenses? And is it always enough or do you come back with a really loaded credit card which has to be paid off over the next few months - including a substantial cost in interest.
There's no quick and easy answer, only a sensible one. Using the list you made add up the yearly expenses, divide by twelve and save that amount each month in a separate account. Pay your monthly bills to all your creditors without fail. Don't think they won't notice a missed payment - they will, and it will affect your credit rating - and that is potentially disastrous. And access your special savings for the annual stuff. That's helping you to live within your income.