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Money & finances Budget well. Save smartly. Spend wisely.

Compile a monthly budget and stick to it.

Set yourself financial goals to work towards.

If you get a bonus, use it to pay off debt first.

Teach your children to save.

Don’t spend money you don’t have.

Understand what bank charges are really costing you.

Invest now for the future.

Complete your tax return on time.

Protect your family and health.

Save for your child’s education.

Understand the jargon related to money.

Donate to a charity.

Know how to protect yourself against fraud.

Understand what a loan is really costing you.

Get debt counselling if your finances are in a mess.

Formalise all loans, even between family members.

Buy or make smaller, thoughtful gifts rather than overspending

Get to know your money style.

Choose to do what’s smart over what’s easy with your money.

Consolidate your debt.

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Money & finances

Compile a monthly budget and stick to it
What a budget really means is spending less than you earn and saving the balance. Most of us think we know the state of our finances, but right now can you say exactly how much you spend each month? It’s really worth making some time to put a budget together to control your monthly spending and ensure you are saving as well.
Now would also be the time to start breaking any destructive spending habits.

What are some good reasons to budget?

• When you budget you know exactly how much money you have at any given time. Knowledge is power.

• A budget helps you to think about everything you spend and to see what things belong together. For example, if you add up movie tickets and buying fast-food, you can see how much you are spending on entertainment. If it is too much, you may have to choose to cut down on certain forms of entertainment.

• When you see how much you pay for something, you start to ask questions. Perhaps you will query the amount you pay on airtime – or query bank charges. A lot of money can be saved by querying things, finding out information – and perhaps using that information to do things differently.

• If a family budgets together, this helps everyone to take responsibility and to share the task of money management. It gives you a common goal to work towards.

• If you know exactly how much money you have all the time, you can make quicker decisions about what you can or can’t afford. Sometimes you have to act quickly to make the most of an opportunity.

• When it comes to submitting tax returns, or applying for credit, you already have all the information about your personal finances at hand. This saves you time in the long run.

For a handy budget guide, download an article by Maya Fisher-French, who writes the financial column for Mail and Guardian.

Set yourself financial goals to work towards
Do you want to be debt free? Do you want to be able to send your child to university? Do you dream of an overseas holiday? Whatever you want to achieve financially will require planning and commitment to sticking to the plan. Set yourself some goals, with timelines and then challenge yourself to make them happen.

A goal needs to be SMART – Specific, Measurable, Achievable, Realistic and Timed. In other words don’t set vague goals.

A bad goal: I want to save some money to buy myself a better phone.
A good goal: I want to save R2500 in the next six months to buy a new Blackberry.
A bad goal: I want to have enough money to go to a college.
A good goal: I need to save R4000 for my college registration fee, which means I’ll have to get a part-time job for the next 8 months.

If you get a bonus, use it to pay off debt first
Your debt is costing you a lot more than you probably realise, so get rid of it as quickly as possible. As tempting as it is to just spoil yourself with your bonus, in the longer term, using it wisely to pay off a chunk on your car or home will serve you better. For tips on being financially smart this year, check out Wilde Insights.

Teach your children to save
One of the most important roles you have as a parent or guardian is to teach your child/ren about money. Download a good article with 6 easy steps to get you started.

Don’t spend money you don’t have
Credit cards and loans seem like the best way to get those things you want, even when you can’t pay cash for it. This is a really bad financial principle. Try to discipline yourself to only spend money that you have, so you won’t regret it later. Get an extra part-time job, spend less on entertainment or ask people for money gifts for your birthday and rather save up for that something special.

Understand what bank charges are really costing you
Every bank account type is associated with different costs and interest rates, so do your homework on the type of account you have so you know what your regular costs are. Typical costs include monthly administration, cash withdrawal, cash deposits, balance enquiries, electronic banking fees, etc. Click here to find all the information you need to understand about a basic bank account.
It is also worth comparing your bank account costs and benefits with a similar account type at other banks. Two sites that offer good comparisons are Just Money and Think Money.

Invest now for the future
It’s never too early to start investing, whether it is for your retirement or your child’s education. You should be putting away about 15% of your monthly income in a safe investment every month. Click here to find five questions you should ask about investing from JustMoney.co.za.

Complete your tax return on time
Make sure you submit your return in time to avoid penalties. You can be penalised for any of the following, with the amounts varying from R250 upwards: failure to register as a taxpayer, not informing SARS of any change of address, failure to submit a return, failure by an employer to submit a monthly declaration of employees’ tax, and many others.
For more information on completing your tax return, take a look at www.sars.gov.za

Protect your family and health
Insurance isn’t the nicest purchase to have to make. Paying a monthly fee for something that may or may not happen is a difficult thing to do, but when you think about what the alternative might cost you, you can understand why it’s so important that you have insurance.
Whether you’re looking for health insurance, life insurance, funeral cover, insurance for your business or any of the other many insurance options, make sure you are well informed. Investigate all your options here.

Save for your child’s education
Currently university education is around R10 000 to R25 000 per year – for tuition alone. If your child was born in 2008 and goes to university in 2027, you are likely to need about R400 000 for tuition alone per child. Scary, isn’t it? A very low-risk, low-cost way to save for your child’s tertiary education is to invest through Fundisa. This is a joint initiative between government and the unit trust industry. Government tops up your annual savings by 25% up to a maximum of R600 per year.

So, for every R40 you contribute to the Fundisa Fund each year, the government will contribute an additional R10. This means you are guaranteed a 25% return before even the growth in the underlying investment, which is in fixed interest (cash and bonds). There is no other product in the market that can guarantee these returns. However, because the bonus is capped at R600, the optimal monthly investment is R200 per month. For further information you can go to the website www.asisa.co.za/fundisa. Note that the website fundisa.co.za is NOT related to this product.

Understand the jargon related to money
Just Money has put together a great list of jargon-busters, so see how much you really know about money terms.

Donate to a charity
“You can have everything in life that you want if you will just help enough other people get what they want.” - Zig Ziglar
Sometimes we need to look beyond our own circumstances and see how we can help others who may need help more desperately. We also want to become known as a nation of givers, not only borrowers. There are so many causes in our country that need your money, your time and your goods, so it’s easy to find someone to donate to. Check out the forgood marketplace for a list of causes needing your immediate assistance.

If you’d like to be part of a large social investment, take a look at SASIX, the SA Social Investment Exchange to find projects needing funding to achieve large-scale change.

Know how to protect yourself against fraud
ATM crime and phishing are the two most likely ways that you will get ripped off, so make sure you know how to protect yourself by reading the SABRIC guidelines, compiled for your protection.

Understand what a loan is really costing you
You need to understand that when you take out a loan, you have to pay back the original amount as well as the interest that accumulates on that loan. In most cases the amount of money you end up paying back is much higher than the original loan amount. Make use of a loan calculator to work out what you’ll be paying back, for example:

Amount to borrow: R10 000 Interest rate: 15% Payback period: 5 years (= 60 months) Monthly payments: R237.90 Total amount paid: R14 273.96

Get debt counselling if your finances are in a mess
The government legislated the National Credit Act on 1 June 2007 to promote an effective, fair and accessible credit market, and to protect consumers from reckless lending and over-indebtedness. The Act introduces regulated Debt Counsellors who have the expertise to help and guide people with debt problems and to design debt plans. This will enable people to afford their monthly debt obligations. To find a debt counsellor in your area, check out the National Credit Regulator’s site.

Formalise all loans, even between family members
Although at the time it seems like a good idea to borrow money from a family member or friend, it’s better to protect both parties by putting a signed agreement in place to make the process legal. Download a blank agreement now rather than risk hurt and misunderstanding later.

Buy or make smaller, thoughtful gifts rather than overspending
Gifts are just that, gifts, so don’t make it a big thing to be seen giving an expensive gift when you really can’t afford it. Rather take time to think about something smaller that the receiver would really value and make an effort to put it together thoughtfully.

Get to know your money style
Are you a hoarder, a spender or an avoider? Take this fun quiz and learn more. It’s compiled by a woman for women but, guys, you also fit into these spending styles so take the quiz too.

Choose to do what’s smart over what’s easy with your money
Smart people make careful decisions when they have money to spend, and they benefit in the long run. Is careless spending and unwise money management ruining your life? Read this thought-provoking article on being a smart spender rather than a silly spender.

Consolidate your debt
Having lots of smaller debts can be expensive and it can also be complicated to keep on top of all the repayments. Typically store cards and credit cards have interest rates ranging from 17% to 30%, whereas a short-term loan could have an interest rate of almost 40%, depending on your credit history. So this form of borrowing is more expensive than a bank loan (preferably a home loan) which typically has an interest rate of 12%.
If you consolidate all your debts into one loan, you’ll have just one monthly repayment to make that will usually be less than all of your old monthly repayments combined.
For more great financial tips, take a look at the Just Money site.

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