Finance – 24 hours of your pay cheque
Understanding your spending habits will help you see clearly what you need to change in managing your money. Once you adopt sound financial habits, you’ll make your salary stretch even further.
Payday! For some it’s mid-month and for others it’s the last day of the month. Whichever date it falls on, the relief that comes with the SMS notification alerting us that our salaries have comfortably landed in our bank accounts is one we all share. But, for many of us, it comes with mixed emotions. It’s a sigh of relief or a sense of accomplishment for the work put in the previous month. In some cases, it brings the dreaded stress of debit orders which, based on our varying financial obligations and spending habits, may leave us either financially fit or see us fall financially flat before the new month even commences.
We took a journey into the lives of four women who allowed us to track the first 24 hours of their pay-cheque, from the authorised debit orders, budgeted for monthly household and lifestyle spend, to the adhoc cash withdrawals and swipes. The purpose? To assist in understanding various spending habits and pull out the good from the bad. Also, to provide counsel on how to turn them around and allow us to meet some of our long-standing financial and lifestyle goals.
THE NECESSITY SPENDER
Meet Virginia Mashaba, a 40-year old marketing professional at one of the four major banks. For her, seeing a positive bank baance in her account is what keeps her sane. As a result, she has become a self-confessed necessity spender, with most of her budget being channelled towards household and lifestyle essentials. “Call me stingy, but I want to always see money in my account, so I try to spend mostly on necessities, with food being at the top of my priority list,” she explains. Virginia admits, though, that she has preferred top-end retail outlets for various necessities which, in most cases, she is not willing to compromise on. However, she does admit that these, at times, come with a higher price tag. She takes us through her transactional journey in the first 24 hours of her being paid.
THE DEBT CLEANER
Thirty-year old accountant, Nozuko Dandala, cleaned up her finances in 2017 as she believed her money could be redirected to better use. “I felt like money was constantly leaving my account and that annoyed me. As a result, I printed out my bank statement and tracked where this money was going and decided to change my habits.” Today, Nozuko has minimised the number of debit orders, with 50% of her salary channelled towards essential expenses – leaving her with an extra R1000 each month that she deposits into a savings account. The first 24 hours of her pay-cheque see only one debit order transaction, with the rest being debited four-days after payday. “Sometimes pay day falls on a weekend or public holiday and I’m a bit scared that any debit orders that fall on this day may not find enough funds and send my account into a negative balance. I feel safer with the 25th of every month because my account will always have funds in it.”
THE MAJOR COST ELIMINATOR
Communications specialist Kgothatso Kgope’s first 24 hours of her pay-cheque are dedicated to major expenses – her bond, vehicle repayment, insurance and levies. With these major costs out of the way, it helps guide her budget for the rest of the month. “I’m then able to map out the rest of my monthly spend and
concentrate on enjoying the little I have left” Rewarding herself on payday is a no compromise, but she admits it quickly beomes impulsive ‘nice to have’ spends that impact majorly on her monthly budget.
THE COVER YOURSELF ADDICT
At 48, Sophie Xaba’s obsession is making sure her family is ‘covered’ should anything happen to her. For this executive personal assistance and mother-of-two, keeping her life cover, children’s educational investment and funeral policies up to date is nonnegotiable. These debit orders are all scheduled to go out minutes after her salary reflects in her bank account. “My priority is my family’s future. So transactions aimed at providing them with insurance and security for the future become a priority.” She adds that most of her salary is dedicated towards enriching the lives of her children and providing them with as many opportunities as she can. Financial Adviser and Head of Retentions at Liberty, Boitumelo Mothoagae, further explains that we should break down our salary and channel different portions of it towards debt and savings – with no more than 50% of it spent on all our debt and up to 30% going into savings. The remainder, she adds, may then be used towards what we deem necessary. “It’s important for us to know and be able to track what we spend on, therefore eliminating any risks of spending money unnecessarily,” she says.
EXPERT TIPS ON GOOD FINANCIAL HABITS:
Budget: Draw up a budget and stick to it as this will help you track your expenses. A budget is like a compass for your finances, it provides a sense of direction so that when you deviate, it’s easy to get yourself back on course again.
Pay extra: Structure your budget so it allows for extra payments on your debt. While making minimum payments is good, making extra payments is even better because it will help you pay off debts early and save on interest. This also helps improve your credit profile.
Avoid impulse purchases: Running out of money before the next pay day is rooted to a lack of planning. Always plan your finances and never let your guard down by giving into unplanned purchases.
Cover yourself: Most of the women have some sort of insurance cover coming off their payslip every month. Insurance is designed to protect you against unforeseen circumstances. Your insurance needs are dependent on the life stage you’re in. Your greatest asset is your ability to earn an income. As you get older you may start a family, become more established in your career, you’ll need comprehensive risk cover. Review this with anfinancial advisor, to ensure you’re not over or under insured.
Save and Invest: A financial advisor will help you to choose the right account that’s suitable.