What's YOUR magic number?

With Black Friday sales circling like vultures above your credit card and Christmas "specials" bombarding you like mosquitoes on a hot summer night, it's time to dust off conversations about BUDGETS!

Before you run away screaming because the very idea of creating and sticking to a budget make your head spin, stick with me - this simple trick makes life super easy - and best of all, it's quick and easy to do.

I understand literally no one has time to write down all their monthly expenses AND then track actual spend against those expenses, including ad hoc expenses of which there are many…car guards, movies, dinner with friends.

But what if there was a way to make it really easy to track your budget and your spend?

All you do is take your annual net income (the actual money you take home), subtract your fixed monthly expenses and then divide that figure by 365 to get to your daily magic number.

Annual net income is the monthly salary/bonuses and any other money you receive after deductions like taxes, employer retirement savings.

Fixed Monthly Expenses - Bills and set payments that you pay. Here are a few examples:

• house bond

• car payments

• insurance (home/car + life)

• municipal bills

• domestic help

• club memberships

• netflix

• holiday savings

• emergency savings

• debt repayment

Some of these might fluctuate (like your municipal bill), and that’s to be expected. They are fixed because they happen every single month and are inevitable.

Of course, you know all too well about unexpected expenses. Things always break. Lightening fries all the electrical appliances in your home. All four car tyres need to be replaced right before you leave for that long-awaited summer holiday. Your puppy develops a strange rash that results in the vet keeping them for observation for two nights, only to discover it was red paint carefully applied by your toddler!

Most unexpected expenses are large and will put your Magic Number in the negative.

So even though “technically” most unexpected expenses (like the pet example) are out-of-wallet purchases, it’s a wise idea to pre-save for them and treat them like a fixed expense under the category of emergency savings.

Right, got that? Now do the calculation.

Annual net income (take home pay) - Fixed monthly expenses

365

That gives you the amount you can spend every day, guilt free. Let’s say it is R50 (about R1500 per month). You can spend the R50 on a cup of coffee, at most two cups depending on your caffeine fix of choice. Or save it and have R100 tomorrow. Save for a week and you’ll have R350 to blow on at a Sunday market. Get the idea?

This is a great little mind trick that ensures you have all your expenses covered and only spend the cash you have left after that. You need to keep track of what you spend each day so you know how exactly much you have left. Alternatively draw cash and make weekly envelopes for yourself. It requires discipline, no dipping into next week’s envelope because you just saw that new Cotton On Black Friday sale!

Follow these steps, and I promise you, you’ll have more money at the end of the month.

Keep it up, and you’ll be astounded at the end of the year.

Okay, go. Find out your Magic Number.

Post inspired by Avraham Byers