Financial wellness for the win!

Colin Anthony
By Colin Anthony May 22, 2019 07:00

Financial wellness for the win!

By Mayo Twala | 22 May 2019

Welcome back readers, to the Tax-Saving South African, where I walk with you in your personal journey through a range of financial themes

The biggest news that’s happened since my last column was the elections. The hope is that President Cyril Ramaphosa salvages South Africa’s financial situation. In the meantime, for those of us who are feeling young and broke, there’s something you can do to salvage your personal financial situation: financial wellness.

What is financial wellness?

Financial wellness involves the process of learning how to manage your financial expenses. Money can be such a stressful topic if you don’t know how to manage it and it’s still stressful even when you do know how to manage it. Feeling in control and at peace with your money is important to your financial wellbeing. Financial wellness is made up of 4 elements: positive cash flow, positive net worth, risk mitigation and credit worthiness.Let’s see how we can become more financially centred in this week’s column. Think of it as financial yoga (cue the “om chanting”).

How to start achieving financial wellness

Well good news folks! You can  take the Intellidex quiz to find out your money score – and stand a  chance to win up to R5,000 while getting some cool tips and tools to manage your money better. Now that I’ve added some shameless self-promotion, let’s look at other ways to achieve financial wellness. It’s worth mentioning that while doing research for this article, I found that many banks have financial wellness programmes to assist. But with banks there’s always a catch … you would have to sign up for an account to get the tip (sigh). So, let’s do this together because unlike the banks, I’ve got your back.

Simple financial wellness tips

1.Prepare for the unexpected. Because life can be hectic, it’s always good to have an emergency/savings fund. My car broke down two weeks ago, thank goodness I had my savings.

2.Construct a monthly budget. A budget will save your life. No, I’m kidding, but not really. Having a budget will help you determine how much you can spend every day without losing control. Paying your expenses off first will help you see how much money you have for the additional spending like entertainment or your savings account.

3.Don’t live “pay-cheque-to-pay-cheque”. This saying by the way is sooooo cliched but it has truth to it. The aim is to save some money every month to build your wealth in the short and long term and you can do this through a tax-free savings account (TFSA) or a bank account.

4.Pay off debt. If, unfortunately, you’ve had to sign up for that dreaded credit card or personal loan, pay it off as soon as you can because this can help you with future cash flow. You never know what you will need that extra money for in future, which leads me to my next point.

5.Make your money work for you not the other way around. Putting your money to work means making your money earn money for you. That is basically when you use the money your earn to buy assets that will earn you money. Good examples of assets are buying a home, saving or investing.

6.Save for retirement. I’m pretty sure by now you are tired of hearing this one. But I can’t stress enough how important this is when you are old and full of life. The earlier you start the better because of the magic of compound interest. For compound interest to work in your favour, you need time because compounding means the money you earn from the investment earns money, over and over again.

7.Get cheaper loans. Banks and other lenders want to lend you money. That’s how they make money. Interest is the price you pay to use their money. Not everyone pays the same price for the same amount borrowed. To get the cheapest price you need have a good credit score. Your credit score depends on five things: pay all your loans on time; have a variety of credit types such as phone contracts, store cards, home loans; don’t keep opening new cards rather keep the one you have for a long time; don’t use all the credit available to you so don’t max out your cards and don’t apply for multiple loans at the same time.

 8.Get insurance. Unexpected events can wreak havoc on your personal finances. Make sure you have the basic insurances in place to protect what you have like insurance for your car, home contents, and income protection.

 9.Keep financial records. It’s a good idea to check your monthly financial statements to ensure all is on order with your money. Luckily, it’s the 21st  century and you can just log into your internet banking app rather than have to print out statements or go to the bank. Matching your statements to your budget will give you a good indication of whether you are meeting your monthly targets.

Remember it’s never too late to become more financially stable and responsible – but the earlier the better, so start immediately if you haven’t done so. (And don’t count on Cyril to do it for you.) The important thing is to make it work for you –so cheers to financial wellness and prosperity!

Continue following this series to become a wiser tax-saving South African!

Colin Anthony
By Colin Anthony May 22, 2019 07:00

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