In a statement, Andrew van der Hoven, head of relationship banking of Standard Bank, explained that a budget should structure one’s spending, but human nature causes us to deviate from our plans and many expenses sneak in without being accounted for.
Surprise costs such as car repairs, unplanned getaways, school trips and medical costs can throw a monthly spending plan out of kilter.
Van der Hoven said, “These are relatively manageable expenses, but we routinely forget to consider some significant expenses as well, and these can wreck even the most carefully planned budgets.”
Things people commonly forget in the monthly budget planning:
- Taxes: If you are a full-time employee, your tax bill is usually taken care of, as tax is deducted from your salary each month. However, there is capital gains tax from the sale of stocks or property, or other forms of income, which may trip you up if you don’t keep an eye on it. If you earn income from sources besides your salary, then a good tax advisor is worth their weight in the money they save you. The self-employed are also vulnerable to tax shortfalls, so a tax adviser is even more important for this group of individuals, especially if they are VAT registered.
- Child maintenance: Both parents are affected by this obligation in the event of a divorce. The receiver of the support may budget for the income, but the liable parent may not hold up their end of the bargain for a number of reasons, so relying on this income can be a challenge. The parent who pays maintenance may be hit with unexpected bills.
- Needy family members: In tough economic conditions, we are often called upon to help family or friends out of financial difficulties, which may put a strain on your budget.
- Retirement savings: Many people make the mistake of focusing on the spending element of a budget, rather than the saving. Saving for retirement should be an integral part of everyone’s budget.
- Home and car repairs: Most people neglect home and car repairs and don’t think to budget for a new roof or tyres. If you own a car or home, you will eventually have expenses beyond insurance and petrol.
- Holidays: People often plan a holiday on impulse and rely on credit cards to cover their cocktails and canapes, but holidays cost a lot of money and may put pressure on the budget in future when paying off your credit card.
Article first published in February 2016