5 WAYS TO ESCAPE THE VICIOUS CYCLE

1 CHANGE YOUR BUDGET WHEN YOU GET AN INCREASE OR BONUS Calculate how much you will get out after tax and deductibles from your salary. Often after taxes and expenses, the net effect of a raise is less than it appeared to be. Plan how much you can use to save, service debt and change your lifestyle.

2 SET FINANCIAL GOALS It’s better to have a clear idea what you want to use your money for, rather than impulsively spending it on the latest fad. If you have a clear goal, such as saving for a holiday, it will help you not to fall for immediate gratification.

3 MAKE GRADUAL CHANGES A bigger house might require higher insurance, more expensive rates and taxes and if it has a large garden, you will suddenly realise you need a lawnmower or gardening service too. Calculate if it won’t be more viable to

4 SAVE AND INVEST INTENTIONALLY Saving doesn’t happen by itself – you must make it a habit. See an independent financial planner to help you map out your goals and which savings plans can help you achieve them. Some unit trusts of successful investment companies start at as little as R200 per month with very low fees. If you just want to save more in your bank account, ask a bank consultant which accounts have the lowest costs and best interest.

5 BE HONEST ABOUT HOW MUCH YOU ARE INFLUENCED BY SOCIAL STATUS It’s a losing battle trying to keep up socially through material things as there will always be someone who sets the bar higher. Material possessions or other people can only make you happy on a temporary basis. You will probably never feel good enough, no matter how much you earn if you always have to keep up appearances. Choose friends who are careful spenders and base your financial decisions on what you can afford, not your wants.