Hal­loween may be over, but there are still a lot of ghoul­ish money mis­takes you can make that could keep you in the red for longer than you planned to be. But it doesn’t have to be this way – by mak­ing a few sim­ple ad­just­ments to your life­style and giv­ing

CityPress - - Business -


1Keep­ing up with the Kar­dashi­ans, Khu­ma­los and Karims is still some­thing many try to achieve.

Priya Naicker, ad­vice man­ager at Old Mu­tual Per­sonal Fi­nance, says: “Liv­ing be­yond our means can re­sult in un­nec­es­sary debt that is very hard to get rid of. The sit­u­a­tion is so dire that work­ing metropoli­tan South Africans are al­lo­cat­ing on av­er­age 16% of their monthly in­come to pay­ing back debt.”

If you are mak­ing pur­chases just be­cause your friends or fam­ily mem­bers have, you need to reeval­u­ate your spend­ing habits, par­tic­u­larly if you are in debt.

The so­lu­tion: Don’t use debt to keep up with your peers, so al­ways avoid mak­ing last-minute pur­chases with your credit or store card. Store card debt in par­tic­u­lar is one of the most ex­pen­sive forms of debt. This doesn’t mean that you can never spoil your­self – but rather fund your spoils with your sav­ings or dis­cre­tionary money, rec­om­mends Naicker.


2If last week’s mini bud­get is any­thing to go by, South Africans are in for a tough time.

Gov­ern­ment is in debt and is strug­gling to find its way out. Rat­ings agen­cies are wait­ing in the wings to down­grade us at a mo­ment’s no­tice. Growth is slow and that means the jobs mar­ket will con­tinue to stag­nate.

The so­lu­tion: If you lie in bed at night wor­ry­ing about los­ing your job, it’s best to safe­guard your in­come, par­tic­u­larly if you have de­pen­dants.

Speak to a fi­nan­cial ad­viser about tak­ing out in­come pro­tec­tion with re­trench­ment cover.


3It’s hard to ac­cess your re­tire­ment sav­ings, but there’s a good rea­son for that – it’s to safe­guard and pro­tect your as­sets.

How­ever, when you switch jobs, it’s pos­si­ble to cash in your pen­sion. But if you ac­cess your pen­sion early and spend it on other things, even if it is a home ex­ten­sion or ter­tiary ed­u­ca­tion, you have to play catch-up and start from scratch again. Dip­ping in can fi­nan­cially set you back years.

The so­lu­tion: Start sav­ing from the day you start work and don’t cash in your pen­sion when you move jobs. Rather trans­fer that money into a preser­va­tion fund or put it into your new pen­sion scheme. If you’re dis­ci­plined about it, you won’t have to suf­fer night­mares over your re­tire­ment short­falls.


4Bud­gets may be bor­ing and cum­ber­some, but they also force you to take note of your debt obli­ga­tions and other monthly com­mit­ments. If you ig­nore your bud­get, your spend­ing habits will come back to haunt you.

The so­lu­tion: Choose a day ev­ery month to go over your bud­get. If you know that you need to make ad­just­ments to it, make the changes im­me­di­ately. Work on it as you go along, but stick to the key prin­ci­ples and goals that you set out for your­self.

Naicker ex­plains that many of us tend to adopt a “wing­ing it” ap­proach to our fi­nances – we just hope our money will stretch to the end of the month.

“In the past year, 52% of South African metro work­ing house­holds found (at least once) that their in­come did not cover their liv­ing costs. Draw­ing up a bud­get is im­por­tant, stick­ing to it is key and peace of mind, to­gether with achiev­ing more of your goals through con­scious sav­ing, is the re­ward!”


5When it comes to mak­ing long-term plans, many of us aren’t very good at it. If you’re ex­pect­ing a baby, don’t just fix­ate on the present fi­nan­cial out­lay such as hos­pi­tal bills – re­mem­ber to also plan for the dis­tant fu­ture, such as your child’s ter­tiary ed­u­ca­tion.

The so­lu­tion: The days and years can whizz by and, be­fore you know it, the child who was born just “yes­ter­day” is ask­ing about money to study at univer­sity.

Don’t only think about the next few months or years – think about the long-term goals too. Talk to an ac­cred­ited fi­nan­cial ad­viser who can go over all those pos­si­bil­i­ties and fi­nan­cial re­spon­si­bil­i­ties with you to­day, and save ad­e­quately for them.


6There are a few peo­ple in your life who want the best of ev­ery­thing for you, how­ever, there are also peo­ple with bad in­ten­tions – and they don’t only come out at Hal­loween and wear big, scary masks.

The so­lu­tion: Peo­ple with bad in­ten­tions can take on any form and the key is not to trust just any­one with your money. Ig­nore peo­ple who promise you fan­tas­tic re­turns, or who send you emails ask­ing for help in ex­change for large de­posits of money for “safe­keep­ing”.

If some­one of­fers you an ex­pen­sive hol­i­day in ex­change for your sig­na­ture – don’t sign it. Take it home and read it over or get an ex­pert to look at it.

Naicker ex­plains that great ad­vice is in­valu­able.

“Only 13% of metro work­ing South Africans have a re­la­tion­ship with a fi­nan­cial plan­ner. Many think we can do it alone, or we don’t even con­sider it at all. A fi­nan­cial ad­viser who you can trust will help you to max­imise your money so you can live your best life.”

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