THE FINANCIAL DIET
Feeling the pinch? There’s a diet for that!
Despite working in corporate finance, Tahlia Hamilton – who is also a food, wine and travel blogger (toomuchloveliness.com) – found that she wasn’t saving as much as she should be.
‘I wasn’t broke, but I wasn’t using my money the way I wanted to,’ she says. She decided to pose the problem to her followers on Instagram (@toomuchloveliness) and soon discovered she wasn’t alone. ‘I was chatting to people who were also struggling to prioritise saving, even though we knew better.’
It got her thinking about creating a financial diet. ‘We’re not really taught how to manage money; we don’t even like talking about it,’ she says.
So how does a spending diet work, exactly? Well, the concept is based on The Financial Diet: A Total Beginner’s Guide to Getting Good with Money by Chelsea Fagan. The plan is to make up your own spending rules, which you then share with the rest of the group so they can keep you accountable.
‘Having a community also motivates everyone and encourages them to talk more openly about money,’ says Tahlia.
‘I wanted everyone to work out the rules that suit them best,’ she writes on her blog. ‘Maybe you’re starting a new corporate job and your rule is no clothes shopping unless it is for work. Maybe you’re moving house, and your rule is no luxury spending unless it is for the home. The more personal your rules are, the better you’ll follow them!’
The diet lasts two months, then you get a month’s reprieve. ‘I
found that for my lifestyle at least, it wasn’t necessary to do it throughout the year, but I also felt that two months was manageable,’ Tahlia says.
In the end, she had 19 participants – from Cape Town, Joburg and even the UK. She created a Whatsapp group chat, #TMLFinancialDiet, where they could share their goals, struggles and tips.
When Tahlia posted about joining her financial diet, I was also on a ‘diet diet’ of sorts (if you missed it, I signed up for SallyAnn Creed’s 63 Days to Optimum Health – there’s a write-up about it in the July issue). I was getting my body into better shape, but what would that help if my finances were in a state? I’d accumulated debt over the years – nothing crazy, but I wanted to get it out of the way so I could put money away for me and my husband. So I joined Tahlia’s group and challenged myself to give up a few of my biggest spending vices: takeaways, eating out, new clothes and beauty products.
At the end of the two months we celebrated meeting our goals with bubbles and lunch at Tahlia’s house, and a talk by financial advisor Candice Paine, who loved the #TMLFinancialDiet concept and believes the key to its success was the sense of community.
‘When you’re feeling a bit weak or have a slip-up, there’s a group of people you can talk to about it, so you don’t lose sight of your goal,’ she says. ‘And the one-month reprieve means you don’t feel like you’re under the cosh all the time but you’re still moving forward with your savings.’
Candice also stressed the importance of looking at what to do with the money you’re saving. ‘Three of the most important places you should be putting your savings is in an emergency fund (aim for at least three months’ salary in a short-term savings vehicle), in your retirement annuity, and in a tax-free savings account (TFSA),’ she says. TFSAs are great for long-term savings as you can save up to R33000 a year (that’s R2750 a month) and not pay tax on the growth that your cash is earning. Plus there are plenty of underlying investment options to choose from. (The maximum you can put into a TFSA over your lifetime is R500000.) After two months I’d made a sizeable dent in both my student and my credit card debt, and today I’m student-debt free and close to being back in the black on my credit card. I always thought I wasn’t a big spender, but the #TMLFinancialDiet showed me I was spending all my money on stuff I didn’t need – and at the end of the day I had nothing really to show for it. At the brunch, three of my fellow #TMLFinancialDiet sisters shared what they had learned from the experience…
Financial advisor Candice Paine also stressed the importance of looking at what to do with the money you are saving.