Employee advice: managing your finances

The worldwide increase in interest rates and debt has resulted in many people depleting their savings just to survive. Day-to-day spending can spiral out of control if you do not monitor your monthly income and expenditure. Knowing that you have enough money for the present and future is what makes you feel financially secure. Budget how much money you require for everyday essentials such food, housing, electricity, water, phone bills, transport and medical services. Any amount available thereafter should be saved to ensure you have enough for unexpected expenses and emergencies.

 A budget helps you to:

• spend your money wisely on the things you must have to survive.
• set aside money for unforeseen expenses.
• set aside money for investments/savings.
• have more control over your money.
• determine how much money you have available for leisure activities such as holiday travels, hobbies, and fine dining.

The key to budgeting is sticking to a basic rule “Spend less than you earn.”

 If you are currently spending more than you earn:

• Shop around for the best deal. Make it a habit to review your insurance policies, medical aid, and subscription packages. Shopping around and switching providers might seem like a daunting task, but it can save you a lot of money in the long run. 

• Review your credit card/loan spend – Too much credit may lead to unnecessary spending and may result in additional interest expenses if not settled timeously. Spending beyond your means is a financial trap. Stay away from the mindset that you will buy now and worry about paying later. It is a mindset that leads to financial ruin. 

• Buy generic – One of the easiest ways to save money is to avoid popular branded items. Low-cost brands (such as those created by retailers) of food items, clothing, cleaning supplies and paper products cost far less than their more expensive counterparts and work just as well. 

• Eat at home – Prepare your food at home and watch your savings pile up because you can buy a week’s worth of groceries for the same price as dinner for two at a restaurant. 

• DIY where you are able to – Before you splash out the cash to pay for a simple home improvement, think about doing it yourself! Usually, the cost of materials and a Google search will save you a ton of money. 

• Sell unwanted items – One man’s junk is another man’s treasure. Declutter your home and identify items no longer required for sale.

If you are already spending less than you earn:

With the extra cash that you save after you have paid for the month’s expenses, you can:

• open an interest-bearing savings account at a bank.
• invest in unit trusts and stock markets.
• pay off debt sooner than expected.
• start an emergency fund. As a general rule, always aim to have 6 months of living expenses in a bank account in case you lose your job.
• invest in yourself. You can use the extra savings to upskill, make yourself eligible for more job opportunities, and accelerate your career progression to increase your future earnings.

Speak to your bank, financial institution, or financial adviser if you want more advice.

Saving money may seem challenging, especially if you do not have a lot to begin with. But if you take care of the cents, the Rands will take care of itself and you will have more control of your finances.

Reetesh Balgobind

Assistant Finance Manager

References

www. Careersidekick.com / What to Do with Extra Money Each Month: 10 Ideas by Biron Clark

https://www.ramseysolutions.com/budgeting/the-secret-to-saving-money How to Save Money: 22 Simple Tips APR 13, 2022

https://www.thebalance.com/reasons-to-budget-money-2385699  Reasons Why You Should Budget Your Money by Miriam Caldwell Updated January 26, 2022

https://www.entrepreneur.com/article/354625 #8 Simple Money Management Tips to Follow in Your Daily Life by Priyadarshini Patwa August 12, 2020