Finance – Celebs on managing money

If you’re a freelancer, FINANCIAL STABILITY is your main priority. We speak to celebs who give us TIPS on staying DEBT-FREE.

Learning how to manage money and make better financial decisions is critical, especially if you work for clients on a contract basis don’t get a monthly paycheque. Just because your income fluctuates does not mean that your expenses should too. We talk to well-known media personalities who’ve managed to keep afloat even when work is scarce, as well as experts, who give tips on how to keep the books balanced throughout the year.

TREAT YOURSELF LIKE A BUSINESS (Unathi Msengana)

Songstress, Metro FM presenter and Idols SA judge Unathi Msengana credits her success to the platforms that have made her a household name, and her production company as well. “Due to the nature of the industry, I had to ensure I have financial stability, so I put my journalism degree to good use. I agreed to join Donald Clarke and Chris Green to establish Lucky Bean Media. We work on productions like MasterChef SA and Girl Eat

World. The company allows me to build a lasting legacy, and to provide for my children,” she says.

Money coach Lumka Khaile says treating yourself like a business ensures financial independence in the long terms. “Like any business, you need to set your goals and translate them into numbers: income, expenses and profit. This will allow you determine whether the business is sustainable or not, and the value or number of contracts that you need to keep your head above water. Don’t be tempted to undercharge. Don’t rely on a single big client, have multiple sources of income,” says Khaile.

Club DJ Naves says all payments from his gigs go straight to a business account. “I formed a company, anyone who does business with me signs a contract with the company, so all payments go to the business account. I get a

salary from it each month,” he says. In any business, cash flow is important. “No matter how much sense purchases makes for a company, small business owners know that if they don’t spend less than they earn, it’s only a matter of time before they go out of business. Personal finances are no different,” says financial expert Ken Clark. So the aim here is to manage your salary as if you’re balancing a company’s cash flow: after all the payments have been made, how much profit is left over? This will give you perspective on how much you earn.

PAY YOURSELF A SALARY (Nthati Moshesh)

If you’re a freelancer, creative, or businesswoman, chances are you get large sums of money at a time, not a consistent monthly income. Experts say it’s best to not blow the money all at once, but rather keep a strict budget for monthly expenses.

With more than 20 years of acting experience, veteran performer Nthati Moshesh has learnt to prioritise. “I pay myself a salary every month. This way, my monthly expenses, like health and life insurance and retirement policies are paid on time,” explains Nthati.

FNB Financial Advisory Channel head Ester Ochse agrees. “Draft a budget and stick to it. Next, ensure that your expenses do not exceed your income.”

Khaile adds: “For example, pay yourself a salary of 50% of total business income, then increase that over time to a satisfactory level. You can also pay yourself and expenses twice a month if there are no sufficient funds so that there’s always money left in your business account.”

CONSULT A PRO (DJ Naves)

Saving and investing allows you access to an emergency fund if work does slow down. Ochse suggests investing and seeking a financial planner in order to achieve set goals. “Irregular income requires strict adherence to a budget for essential items: bond repayments or rent and paying off debt. It’s important to speak to a financial planner who will help you articulate your goals and invest accordingly,” she says.

DJ Naves agrees. “My mom got me in touch with a financial advisor, and he has been my go-to guy ever since I started working. I had a conversation on money management with presenter Thomas Msengana. The most important lesson I learnt from him was to save.”

Moshesh says this is also her saving grace. “Freelancing, by its own virtue, is very tough. You can be shooting a drama for four months then be without work for 10 months, so how do you make that money stretch? I had to discipline myself and learn to save. I also have an advisor, who makes sure I maintain my finances,” the actress says. Author of The Total Money

Makeover, Dave Ramsey, says, “You wouldn’t build a house without a blueprint, so why do you spend your lifetime income without a blueprint?” There are experts who know more than you so make sure you use them. Make-up artist to the stars Nthato Mashishi says his biggest lesson has been accepting that he needs help. “Having a financial planner who understands my goals and invests my money allows me the freedom to not stress. I know that I have to cut off liabilities, and to differentiate betweens needs and wants. ord it.” Finance guru Greg Pollock says just like medical advice, aim to consult with three advisors.

KNOW NEEDS VS WANTS (Nthato Mashishi)

When your income isn’t consistent or stable, don’t acquire debt as it can be hard to keep up with the monthly installments. Once you miss debit orders or payment, it affects your credit record.

The South African Reserve Bank and Stats SA’s figures indicate that in December 2015, the household debt-to-disposable-income ratio was 77,8%, which is very high.

“The best way to stay out of debt is to not take on credit in the first place. Cash is king when you don’t know when your next pay cheque will come in. If you’re already in debt, pay off your accounts before you start your freelance business,” says Khaile.

Although Ochse concedes there is such a thing as “good” debt and “bad” debt, you shouldn’t take out loans for luxuries and entertainment purposes. She says that is how most people end up accumulating unnecessary debt due to the high interest rate payments. “There is good debt, which is progressive in nature, such as a home or study loan. A study loan can improve your ability to earn an income and property appreciates in value which can boost your investment portfolio. On the contrary, bad debt constitutes securing loans to pay for holidays, luxuries and this should be avoided,” she says.

Celebs and experts agree: financial freedom is achievable with discipline and smart money habits.