I have had to manage my own budget fairly tightly since the first hard lock down started a year ago. With a few months of zero income and being forced to spend my savings, I knew what I needed to do first to make sure I was not spending more than I earned. I relooked my budget and was ruthless at cutting costs. I even cut my food budget in half and spent more time cooking and planning my meals better.
When was the last time you relooked your budgets? How often are you even checking your bank statements to be sure where all your money is going?
South Africa is a buy-now, pay-later society. The effects on young people’s financial literacy are thus characterised by the same behaviour patterns as parents and society as a whole. These are high credit and high consumer behaviour with very little savings, and in turn high social risk behaviour. MSK is working to change this disastrous pattern.
“Growing your wealth” seems to be the new buzz word around town. Most financial institutions are trying to educate “the man on the street” about investing and trying to get them to use their platforms. That’s how easy investing has become. There are online platforms you can start to use to trade shares, bonds, ETF’s and more. These institutions have made it very simple for us to try our hand at investing.
When it comes to your financial security, it’s all about planning and long - term goals.
How would you define your money mindset? How do you feel when you look at your finances, earn money, pay bills and talk about money? For many of us money brings up a lot of emotion. For some it can be positive, but for many it is negative. We feel dread when we see bills and guilt when we look at our current bank statement. It is important to become aware of these emotions so that you can process them and work on creating a money mindset that makes you feel good and helps you work better with your money.
The first time I set a financial goal was when I was 32 years old. It was a skill I needed to learn. I needed to formulate a plan to achieve my goals and I can honestly say that goal setting was one of the biggest drivers in changing my financial situation. I still set goals for myself each year because Goal setting gives meaning and direction. Setting financial goals helps us focus on our finances.
Setting goals marks the beginning of financial planning to help you achieve your goals and objectives at various stages in your life.
The first time I ever did a value exercise I was 38 years old. It was an interesting experience because I had no idea what I valued in life or in my financial life. My top value at the time was family. What was scary was I was not living up to my core value in any way, shape, or form.
My family life in fact was a shamble, I was unhappily married and was not spending quality time with my kids, I was always in a bad mood and worked long hours and every Sunday. How could family be my core value when this is how I was showing up for my family every day? Understanding how important that value was to me made me make some big life decisions. I chose to get divorced. We now have 2 happy homes and when I have my kids, I spend quality time with them, and we are all so much happier now.
South Africa is a buy-now, pay-later society. The effects on young people’s financial literacy are thus characterised by the same behaviour patterns as parents and society. These are high credit and high consumer behaviour with very little savings, and in turn high social risk behaviour. Money Savvy is working to change this disastrous pattern.
The last year has been really challenging not just for me but for many people across the globe. For the first time in my lifetime, we have experienced a global epidemic. We heard and still hear statements like “No work no pay”, “Salary cuts”, “closure of many small businesses”, “This virus is here to stay”.
Gone are the days when the mom stays home to take care of the kids while the dad goes to work. I was fortunate when I was younger because my mom stayed at home. She on the other hand was totally unfortunate. When her and my dad divorced at 40, she had to start her life with nothing, never having worked and having no real skills.
Even if I did have a husband who could look after our family, I would insist on making my own money. Not just 1 source but multiple sources of income. Why?
For me my most important value is security so having money for speaks to my values and beliefs. I never want to end up like my mom with not enough money to look after myself.
It’s clear now more than ever that having more than 1 source of income is not a ‘nice to have’ but a necessity. With prices and inflation always on the rise fixed income is no longer the best solution if you have plans on growing your wealth or retiring rich.
Life is like a game of snakes and ladders. You never know what the next roll of the dice is going to give you. It could be a snake(threat) that could cause you to regress in your financial life. Or it could be a Ladder (Opportunity) to take you to the next financial level of success.
So, if life is so uncertain and the world, we live in now is so uncertain how do we mitigate the risk or the snakes in our financial future?
2021 is the best time to become savvy with your money. We learnt the hard financial lessons last year and now it is time to use those lessons to build a better financial future.
Step 1 of becoming money savvy is to get clear on where you are now. This requires you to be honest with yourself. This exercise may bring up different emotions and that is okay. It is important that you feel those emotions and ask yourself why. For many people looking at their finances brings up negative emotions and can leave them feeling guilty, regretful and frustrated. Do not let this deter you. Take the time to recognize how you are feeling. This is an important step in your money journey.
How To Get Money Savvy In 10 Easy Steps
Managing your money is a skill that you can learn. Even if you think you know enough, there is always something new to learn about growing your wealth.
We were not taught about money in school or by our parents. In fact, talking about money was taboo in my house. My dad made all the money, and my mom paid all the bills at the bank each month. I knew there was always cash in the safe and that my dad paid the labour wages on a Friday so on a Friday there was always wads of cash at the house. This was my financial education from my parents. My mom also told me constantly that “Money did not grow on trees” and that “I will need to work really hard for my money”. Both “beliefs” were beliefs I needed to change as an adult. I hated that all my pre- programming about money was all negative.
The world has been thrown off its centre due to Covid-19 and the implications thereof. Our country is in a state of emergency and lockdown has resulted in jobs being lost, salaries being cut, personal finances being destroyed and an economy that is damaged. However, despite these circumstances we still have to find a way to manage our finances, take care of our families and ourselves and move forward.
Looking back to January this year, what do you wish you had done differently? For many people it comes down to finances. They wish they had saved more, built an emergency fund or possibly invested in a mask or hand sanitizer manufacturing company. I guess that is how we will always feel as human beings. We will always look back and wish we had known better and done better. Or could we do things differently?
Did you know that 70% of income earning South African’s are in debt? And with the arrival of the Coronavirus and downfall of our economy, what then about the financial freedom of our children?
Poor financial decisions can have a long-lasting impact on individuals, their families and society. The causes of the recent financial crisis are complex, but the lack of financial literacy is certainly one of the aggravating factors leading to ill-informed decisions on home loans and credit purchases. Low levels of financial literacy have also been associated with a lower standard of living, decreased psychological and physical well-being and greater reliance on government support.
We all know that life during COVID 19 is filled with countless unavoidable worries of the financial kind. Some may feel it more than others, but we all feel it non-the-less. We are losing our jobs, taking salary cuts and closing our once thriving business. Basically, we go into level 1 of survival mode when it comes to our finances due to the crunch we feel. Here are 5 Tips to get you to the next level of survival mode.
Everyone’s life is different, but many have still been impacted in similar ways because of the impact of COVID-19. 2020 was a mean teacher but the lessons were clear. In some way or another, you and your family have probably been impacted by a job loss or reduction in income. 2021 is promising a bit of the same and the potential for more job losses, pay cuts and reduction in income is prominent. I join you is shouting “this sucks!”
However, you do not have to let this situation define you. This is an opportunity to learn A LOT and as we know learning life lessons are not always pretty or easy. It is also an opportunity to become money savvy and build a financial life that is more secure for you and your loved ones. One that leaves you breathing a sigh of relief and feeling more secure and certain for the future instead of feeling run down, stressed out or worrisome.