A tough 2021 is coming to an end and the festive season beckons. Unfortunately, for many, it will not be festive at all, as retrenchments, a dwindling household income and the economic effects of the COVID-19 pandemic have drastically reduced disposable income.

Budgeting is one of the most important tools to steer you through troubled financial waters, and there are several ways to navigate the festive season and see the year out on a financially sound basis, even with limited resources at your disposal.

Here are a few tips on how to keep your household budget shipshape:

• Make a list of (and pay) all your “required” expenses, such as the rent (or home loan instalment), municipal account (or pre-paid electricity), cellphone or internet bills (for emergency communications), school fees, insurance, medical aid and commuting expenses. The second line of expenses includes food, entertainment, clothes and, most importantly, savings for a rainy day.
• Once you have compiled your expenses, figure out how to reduce them and where to obtain items at a reduced price – saving money on your purchases can be compared to an increase in income, so keep an eye out for specials on items that you need to buy regularly. This includes retail specials, promotions on cellphone contracts, and getting a discount if you pay certain expenses under certain conditions. Buying pre-paid electricity in bulk units can also save you money in the long run. It is important to know the cost of items and constantly be on the lookout for promotions.
• Planning your weekly food menu ensures that you buy only the required items. Also, plan to use everything when preparing your meals – not only will you save money, but you will also reduce waste.
• Steer clear of non-essential items offered on credit, such as furniture and appliances, as the interest charged as part of the credit terms is usually very high. If you cannot purchase such an item with cash, do not purchase it at all. Rather add it to your future wish list, and when you do have cash available, make your purchase.
• The average family spends more time planning their holidays or entertainment activities than their personal and household finances. It is vital that you keep track of expenses on a monthly basis. This will give you an idea of the amount of income that you need as well as enable you to monitor increases (or decreases) in these expenses. More importantly, you can reprioritise your list of expenses – move some up and some down the list, remove others altogether or add new expenses.
• Sell off unwanted items like an old phone or other appliances. There are various online platforms on which you can sell these items. However, be careful when using these platforms – whether you are buying or selling something, be wary of potential scammers. 
• If you receive a bonus, spend it wisely. Firstly, use it to repay any debt that you might have; secondly, pay expenses that are in arrears. If there is some money left, save at least 50% of it; the rest can be used to buy necessary items that you could not finance during the year, like appliances or clothes.
• If you are able to give your child a small monthly allowance, encourage them to save their money. You can reward them with “interest” if they show you that they have saved a certain percentage. Also teach your children to save electricity, water and food. Not only will this save you money, but it will also ensure that they are responsible citizens who are contributing to a sustainable society.
• Many activities are not expensive, or cost nothing at all. During the festive season and school holidays, get outside and enjoy the lovely South African weather. Seek out activities by getting input and ideas from all household members. If you do travel, prepare your own food and snacks, and avoid expensive restaurants and take-away food.
• All household members should be part of the financial budgeting process and discussions about household expenditure. By doing this, you not only create understanding about a household’s financial position, but also educate your children from a young age, thereby creating a culture of financial discipline.

Professor John Hall is Head of the Department of Financial Management in the Faculty of Economic and Management Sciences at the University of Pretoria.

This article first appeared on Fin24 on 12 December 2021.