A three-step ap­proach to get­ting your fi­nances un­der con­trol

Fairlady - - CONTENTS - By Ca­tri­ona Ross

Of course you’ll start sav­ing when you’ve paid off your debt, and never buy shoes on your credit card again. But since you aren’t good with num­bers, maybe it’s best to just ac­cept that you’ll never be wealthy. If that’s the way you think, think again, says Mar­nita Op­per­mann, part­time ac­coun­tant and money coach, who has a three-step ap­proach to get­ting your fi­nances in or­der.


In or­der to change your ob­struc­tive be­liefs about money, you need to un­der­stand where they come from. Write a ‘money bi­og­ra­phy’ – a record of your feel­ings about money from when you can first re­mem­ber. For in­stance, if your par­ents were anx­ious about money, you may have in­ter­nalised that anx­i­ety, which has caused you to be­come paral­ysed when it comes to your own fi­nan­cial af­fairs. Con­versely, your aware­ness of their anx­i­ety may have steered you in the op­po­site di­rec­tion – re­fus­ing to let money cause you anx­i­ety and spend­ing with­out think­ing. Track­ing your his­tory will open your eyes to your own pathol­ogy.

These are four lim­it­ing be­liefs that of­ten crop up in Mar­nita’s in­ter­ac­tions: • ‘I don’t have enough money to start sav­ing.’ There’s noth­ing wrong in start­ing small: try R100. The key is to be­gin the prac­tice of putting money away, be­cause it’s hugely em­pow­er­ing to have sav­ings. Work up to sav­ing 10% of your in­come, even while you have debt. • ‘I’m not good with num­bers so I’ll never be good with money.’ Be­ing good with money has noth­ing to do with ac­count­ing skills and ev­ery­thing to do with mind­set. Say: ‘I am fully ca­pa­ble of un­der­stand­ing my own fi­nances’ and ‘I can make my money work for me.’ • ‘I can’t af­ford that.’ In­stead, say ‘I have other pri­or­i­ties right now.’ It doesn’t mean you’ll never be able to af­ford what­ever you may want at the time – it just means that at the mo­ment you can af­ford other, more nec­es­sary, things. • ‘I don’t de­serve to be wealthy.’ This kind of think­ing can re­sult in set­tling for less than you de­serve for the work you’re do­ing, or lack­ing the con­vic­tion to start that en­tre­pre­neur­ial busi­ness you’ve al­ways wanted to, for ex­am­ple. Self-con­fi­dence is key.


Fall­ing into the debt trap. It’s tempt­ing to take on new debt to ser­vice old debt or cover liv­ing ex­penses. Don’t! Once you’re in a down­ward debt spi­ral it’s hard to get out, and it causes huge stress. ‘The worst kind of debt is buy­ing food and luxury items on credit. If you only make the min­i­mum pay­ments on money you owe, that bas­ket of food or hand­bag will cost you so much more,’ says Mar­nita. • Not sav­ing. Start grow­ing a buf­fer fund, even if you have debt – ide­ally, three to six months of liv­ing ex­penses. It’s for un­ex­pected ex­penses such as med­i­cal bills or new tyres. Au­to­mate it via a stand­ing or­der. One way to make sure you have some­thing to put away is to cut out a luxury item each month – per­haps al­co­hol this month, next month your daily cap­puc­cino – and put that money into a sav­ings ac­count.

• Ig­nor­ing your fi­nances. Bury­ing your head in the sand be­cause you’re scared or too busy or your part­ner han­dles it all, makes the sit­u­a­tion worse. Get­ting a han­dle on your own money is em­pow­er­ing. • Un­der­charg­ing. Watch out for this, whether you’re a salaried em­ployee or self-em­ployed. ‘Don’t set­tle for less than you’re worth, or less than the other party is pre­pared to of­fer,’ Mar­nita says.’


1. List all your ex­penses for a month – on a spread­sheet, in a note­book or us­ing an app such as Wel­lSpent on iOS or GoodBud­get on An­droid. As­sign each item to Fixed Ex­penses (bills, rent, util­i­ties) or Dis­cre­tionary Ex­penses (food, petrol, en­ter­tain­ment and other ex­penses that you con­trol). This way, you’ll also know ex­actly what your fixed ex­penses amount to per month, and your ap­prox­i­mate dis­cre­tionary spend­ing. 2. List your debts, the in­ter­est rates and min­i­mum pay­ment amounts. What do you owe? 3. Stop us­ing more credit. 4. Start re­duc­ing debt by pay­ing ex­tra to­wards your small­est debt. Once an ac­count is paid up, add the amount you paid to the next cred­i­tor’s pay­ment. 5. Save be­fore you spend. If you save first, you’ll ad­just and make do with what you have left.


• Just do it. The im­por­tant thing is to start, no mat­ter how small. • Steadily in­crease the per­cent­age of net monthly in­come saved to at least 10%. • Find bet­ter deals. Can you cut any­thing from your dis­cre­tionary ex­penses or swap it out for a more af­ford­able op­tion? For ex­am­ple, trade a R500–R1000 monthly DStv con­tract for Net­flix at R100 a month. Put these sav­ings in your buf­fer fund. • Pri­ori­tise your cash buf­fer fund (see Step 2). ‘Not only does this pro­vide im­mense con­fi­dence and fi­nan­cial peace of mind, a buf­fer fund is key to break­ing the spi­ral of debt,’ says Mar­nita. When un­ex­pected events oc­cur, you can be your own line of credit in­stead of hav­ing to get an over­draft or bank loan at a steep in­ter­est rate. Keep your buf­fer fund in a sep­a­rate ac­count or, if nec­es­sary, use an­other bank. Treat it as an­other bill or monthly debit to be paid; that way, you’ll ad­just your spend­ing ac­cord­ingly. • Don’t rob your­self by tak­ing from your sav­ings for ev­ery­day items. Re­serve your buf­fer fund for un­ex­pected oc­ca­sional ex­penses. • Save a por­tion of wind­falls. When­ever you re­ceive ex­tra money (bonus, in­her­i­tance, re­bate) al­lo­cate an amount to­wards your buf­fer fund be­fore spend­ing on any­thing else. • Pass on the habit of sav­ing to your kids. En­cour­age them to put away a por­tion of any cash re­ceived, whether it’s pocket money or a gift.

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