How to Manage your finances

INTRODUCTION

 

Sound financial management is the key to you and your family’s well being. It’s important that as the ‘financial manager’ of your family – whether you have kids, are married or single – you take the same view of your money as you would if you were running a business.

 

You only have so much income and it’s up to you to ensure your expenditure is not higher than what comes in every week or month. Every South African dreams of owning their own home no matter where they live and very few of us can afford to buy a house for cash all in one payment. It is understood that to realise this dream we have to borrow money. What is critical to buying your own home (or a car, or something big and expensive) is that you don’t over extend yourself.

 

Sit down and do a very honest budget which includes every single thing that you spend on over a month and see how much money you have left from your salary or wages. Our budget tool includes just about everything the normal home can spend each month. But to check if you have everything keep a small notebook in your wallet, car or handbag and write down every cent you spend.

 

Include the daily paper, charity donations, that loaf of bread at the petrol station, the tip to the petrol attendant. Just jot it down, as you spend it if possible, but each night before going to bed. Include your partner’s expenses as well and the kids, if you have them. You’ll be surprised at just how much cash you hand out each week.

 

Once you have a clear understanding of what you spend and on what, have a family meeting as to what you can do without or save. If you are saving for the deposit on a home or car, this step is essential if you are to achieve your goal. If you already have a mortgage/bond, car finance and credit cards – get out ALL those bills and monthly statements and start the process in detail.

 

Set your goals

 

What are your dreams and goals? An overseas holiday? University fees for yourself or your kids? A new car? A new fridge? Make sure you know what the cost is – exactly. Include the VAT; if it’s a holiday, include spending money.

 

If it’s a car, get quotes for insurance, servicing, petrol, tyres. Be realistic – dreams only come true if you plan for them and take action. Write them down, pin them on the wall or the fridge or on your mirror so you see them every day. They come before a cool new shirt or shoes you don’t really need. Before a new CD. Before another expensive meal at a fancy restaurant. You decide and take control – it’s your money. They are your dreams.

 

Don’t forget to consult an expert for your long term investment and savings needs, make a savings plan, stick to it and use it wisely.