Finance – Change how you view money

The following straightforward money i nsights will alter how you think about and use your money, turning you into your own financial coach overnight

It’s no secret that some women love spending and go about their lives not caring much about the state of their finances. Yet, understanding your daily money habits is crucial in achieving your financial health and security. Money coach and debt counsellor Winnie Kunene says people tend to believe that money is the most powerful thing in their lives, whereas it is mainly a tool that should enable us to unlock happiness in our lives. “It all begins with the need to change our mindset by giving money proper context and understanding what it does for us,” Kunene elaborates. She adds that happiness is an individual journey and differs for each of us, and so should our money goals. “Our financial journeys and life experiences are not the same. Therefore, the first step is defining what financial freedom means to you and also gauge if this personal description is in line with your dreams and aspirations.”

The following expert advice will, hopefully, help you rearrange your money thoughts and equip you to handle your money matters like a pro.

BE POSITIVE ABOUT SAVING

What we utter with our mouths eventually becomes reality. According to Kunene, statements like, ‘I don’t know how to make or manage money,’ will lead to us overspend frequently as we have already eliminated the possibility of saving towards our financial freedom. “Find a compelling reason for saving and plug out of the debt system. Saving is for security and we all need to have a fund that we are able to tap into during rainy days,” she says.

Mashilo Matseke, an independent financial advisor, agrees. “I always use this simple logic — the best way to save is to spend less than your income so you have something left over for the following month. This is how you can start making saving a part of your financial goals,” Matseke says.

FIND A MONEY PAL

Financial advisor Mbuso Mchunu says that having a financial pal — much like a gym buddy — will keep you both motivated and up-to-date with your finances. “It is important to ensure your pal’s level of thinking is on par with yours, so you can both understand each other’s needs and hold each other accountable. In this way, what needs to be achieved will be accomplished, and the financial journey towards reaching your specific goal will be consistent,” Mchunu says. Kunene adds that having a financial pal will help build your discipline so you can enjoy the money you sweat so hard for.

REDEFINE RETIREMENT

For most people retirement means the end of your working career and sitting at home doing nothing. “It is time we redefined what this means to us as we become more useful in life when we stop being others’ servants. We cannot allow our wisdom to die,” Kunene says. By redefining what retirements means, you’ll be able to unlock new possibilities, such as acquiring a new skill or starting a business that will plough back into your financial freedom, something a retirement fund can assist in realising. “So, do not limit the fund to being merely just a financial pot that you draw from for your everyday living but as a financial springboard that can assist in unlocking further goals,” Kunene adds. To help you stay on path, keep in mind how you’d like your retirement years to be like, Mchunu advises.

AVOID BAD DEBT

One of the best things you can do for yourself is to understand the possibility of living within your means, Kunene

encourages. “This will enable you to put money away and start plotting out some of your personal and career goals,” she says, explaining that when looking into acquiring debt, assess whether the debt will contribute towards bringing you money. “A car that you drive to work or use to do business is a good debt to have but one that stays parked at home most times is not worth it,” she explains.

USE CREDIT WISELY

According to Mchunu, credit can help you realise your goals, like buying a house or starting a business. However, the best way for it to work for you, is only if you learn how to manage it. Ensure that you make your repayments on time, regularly assess your bank statements in order to track any differences in interest incurred, keep track of your spending and minimise your limit. A credit card can be a great convenience, Kunene adds, but you must understand what you use it for. “You pay for every little swipe you make, so minimise its use. Some credit cards offer a free interest period – try to pay off what you’ve spent within this time frame,” Kunene continues.

CASH IS STILL QUEEN

Most people prefer swiping their debit card for purchases instead of using cash mainly because of the high risk associated with carrying hard cash. “Cash enables you to control your finances as you tend to spend less and remain disciplined. The less you swipe, the less bank charges you will incur allowing you to save a bit of money,” Mchunu explains. Kunene also adds that it doesn’t matter how many cards you have, cash is still important especially when emergencies arise.

NO MORE OVERDRAFTS AND REVOLVING LOANS

Kunene has only one thing to say regarding overdrafts, revolving and micro loans — and that is #HappyPoverty. She explains that relying on these products to fund your life will only get you into more debt. She cautions that we steer away from them. “An overdraft and revolving loan are a form of unsecured lending and their interest is usually very high. By acquiring these, you are basically borrowing the same money every month to pay off what you owe. This means not going anywhere in terms of freeing yourself from debt.’’ Kunene advises that we all try to get out of debt and stop using such loans as safety nets as they push you further down the poverty pit.

GET A MONEY VISION BOARD

Having a vision board helps you stay on course and reminds you of the bigger picture. “This will help you stick to your budget and not overspend. A financial vision board allows you to make adjustments if the need arises. If you do well, don’t be scared to reward yourself to keep you motivated,” Mchunu adds.