Healthy financial habits

I’m sure many of you have read, spoke and contemplated a lot on how to safe more and spend less.  A study indicated that many South Africans, especially the young adults, do not put money away towards retirement and/or “a rainy day!” Research done overseas, indicated that very few people, regardless of their age, put money away.

In these times where many things are just getting more-and-more expensive, it can be quite tricky to have any money left to put away!  However, whether it is R10 ($10) a week or R100 ($100) a week, every little bit counts and, as the saying goes “the pennies make the pounds.”

Here are a few tips to help kick-start your financial freedom:

Reading personal finance-books or listening to podcasts while driving

One of the best ways to learn is to study and educate yourself.  Whether you want to know how the stock market works, or need advice on managing your finances better, all you need is a few hours to either browse through the bookstore or online and find something that speaks to you.

Pay of any short-term debt(s)

Whether it is a credit card, store card or short-term loan, try to pay it off as quickly as you can.  Otherwise it starts to pile up and cost far more (think of interest charged) than anticipated.

Start to build an emergency fund

This could be a separate bank account, for example, where money is paid into in case of emergencies (car accident, unforeseen maintenance on the house / car, and so forth).  Experts advise that the emergency fund should have enough money for at least 3 months in order to sustain you and your family.

Tracking your credit card rating

Experts agree that it is a good idea to track your credit rating, especially when you are buying property.  You can either contact a registered credit bureau or visit their website.

Recording and tracking what you spend on a daily or monthly base

A good idea is to “keep book” to track how much you spend and on what.  This is a great and easy way to make you aware of any unnecessary expenses and/or if you are overspending.  It also teaches you to become more mindful about what you spend your money on, how much you spend, and whether / not it is a need or a want (read my article on Mindfulness for easy-to-do tips about being more mindful).

Creating a budget and sticking to it as much as possible

Instead of allowing your spending to determine your budget, let your budget determine your spending.  It is important to stick to it, especially if you have debt.  The rule-of-thumb is to first pay what has to be paid, for example electricity, rent, petrol, food, and so on.  Then make sure there is money to pay of any credit card / other debt. 

Lastly, if there is any money left, put some aside for entertainment / treats; but don’t forget to put money away towards savings!

Reducing expenses

When you have kept track on your expenses for a month or two, you quickly get an idea if any money is spent on nonessentials.  Then you can start to cut back and instead of eating out twice a week, for example, you can change by only eating out once a month and save the rest.

Saving made easy(ier)

Many people struggle to save and instead, spend money on nonessentials.  So, what is a better option?  Automating it!  By putting in an automatic transfer either at the beginning or end of each month, you cannot spend the money because you don’t have it but you also don’t think about “what to buy” with it anymore.

Closing any non-used accounts

When you have accounts, like store cards, open but not using it anymore, the banks and / or stores still charge you for the cards.  Close them and only keep that which you use.

Thinking long-term and not just short-term

Once you have established a good, working plan for your short-term financing, start to think long-term.  You can ask questions like Where do I want to be in 5 years?  Within how many years do I want to pay off my car?  How much money can I put away each month toward paying off debt / towards retirement?

Shopping-lists

When you’re out grocery shopping, you often come home with more than what you wanted.  Making a list is a good way to buy only what is needed.  However, when it comes to non-perishables, one can buy in bulk.  This will save you money for the next few months and, with prices going up the way they are, it is an easy way to save. 

This, however, should only be done if you can afford to do it, so again be mindful about what you need to buy in order to save in the long run, and what not to buy as it isn’t a necessity. 

Another good tip is to not to misuse your credit card(s) 

Many people will use the one card for spending, while using the other card to pay off debt.  Whether it is clothes and other nonessential items that you buy, the best advice I got growing up is:  when you buy property, for example, pay it off completely before installing a swimming pool or buying that new car.

In today’s modern world, it is easy and quick to use a card instead of cash.  However, whether or not you have the cash in your hand or not, keep track on how much you spend and on what.  Adults and children alike will benefit from saving – setting an example for your children is vital – in the end everybody will reap the rewards!

Being in debt is not just detrimental to your financial health, but it can also be detrimental to your personal relationships, as well as your physical- and emotional health.  Various symptoms can develop due to financial worries – sleepless nights, stress, being agitated and fighting, becoming depressed, not eating properly, and other symptoms.  Did you know that, the thought of getting a late payment notice, for example, doesn’t just make you uncomfortable?  It will also cause rapid heartbeat, shortness of breath, dry mouth, headaches and the shakes!

Thus, buckle up, become mindful and start saving today!  Every rand and cent saved will give you the financial freedom you want, it will create and maintain healthy relationships, and you will have a healthy body, mind and spirit!