Visit sacoronavirus.co.za to stay informed about Covid-19.

PRACTICAL IDEAS AROUND BASIC FINANCE

by | Dec 1, 2021

October was World Savings Day…don’t worry I didn’t know either…I think we need to do a bit more to highlight this important topic.

This was a day dedicated to encouraging people around the world to save money. There were a few interesting data points that came out of it. I followed an article written by Susan Steward from Budget insurance which I thought was worth a read.

Something close to my heart:

I feel that financial knowledge should be there to provide practical life skills which can be meaningfully applied immediately. We focus so much of our attention at RWM on the high end dealing with fund managers and economic data, which we should be doing. But I think its also worth tipping the hat to being aware of the basics and how these basics can assist those around us.

It’s often happened to me at family gatherings or with younger folks, that they seek to get a baseline on good financial habits that can assist somebody with R 100 or R 1 000 000 alike.

As we move into the holiday season, my intention is to refresh this information in our minds, so that if we interact with any friends or family who may need this information, that you may recall it and provide a few words of wisdom. Remember that if they need formal financial advice, we are open to chatting to them. It’s been a hard year for a lot of folks, and I believe that we can never stop trying to find ways to think of others.

Some of the data from Susan Steward:

In the US, millennials and Gen Z are winning, with 60% being more financially confident and able to save more money, compared to pre-pandemic times.  The same cannot be said by their millennial and Gen Z counterparts in South Africa.

A recent poll by Budget Insurance found that 71% of respondents born between 1981 and 2003 are not able to save more money than in pre-Covid times.

And while 58% of the US respondents have managed to create new savings goals because of changes in their spending habits, and save at least $1 000 from the start of 2020 – South Africans simply have too much month left at the end of their money.

A tough economy and Covid-19’s undeniable impact has had a major effect on our ability to save.  Smart changes, however, can pave the way for a moneywise future.

Here are some money habits you can adopt now:

  • Budget. Drawing up a budget is the holy grail of smart money management. To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
  • Remember, even the smallest adjustments can make a meaningful difference over the long term. Channel the extra money you have into paying off your debt faster, starting with those with the highest interest rates, first. As your debt repayments start getting smaller, you will have more and more money to allocate to your personal savings and other more worthwhile causes – such as saving for retirement planning or a deposit on a new house.
  • Set a savings goal for yourself and consider saving as a non-negotiable, essential ‘expense’ on your monthly budget. Whether your goal is to put away R150 or R1 000 a month, put it in your budget and stick to it.
  • Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your financial situation.
  • Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save cutback on electricity costs.
  • Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.
  • Fuel, water and electricity. Budget Insurance calculated that driving smartly and working sparingly with water and electricity – through water saving faucets, energy efficient devices, switching off non-essential appliances, servicing and checking your vehicle and driving smartly – could save you around R20 000 each year.

Trying times are a massive test of our financial resilience, but they also offer a great opportunity to relook the way we spend, save and invest, to make the necessary changes and to move from being in trouble, to making ends meet, to thriving – living a life where we can afford the essentials we need, the investments we should make, as well as the luxuries that we want.

Have a wonderful day.