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Managing your Money

Money makes you more of what you already are.

If you a fool, it makes you more foolish.

If you are generous, it makes you more generous.

If you are a smarty pants, it makes you more of a smarty pants.

My last post was on lotto winners and how they often go broke. When you put your mind to it, you can blow a million in no time without any effort. Many of us will never win the lottery or inherit a large lump sum, but most of us will earn a salary every month. Some can build their millions from their meager salaries while others will retire in abject poverty.

The concept is still the same; if you are not prudent with your money it will grow wings. We need to learn to manage our money. Many are waiting to hit it big before they start budgeting. Budgeting and managing money should start early. I learnt a lot from my mother who always included me in the financial decisions in the house. I thought it was so that I wouldn’t ask her for money because if I knew how much she earned, I wouldn’t ask for any lavish stuff. All the same, I learnt to budget from an early age. My dad opened a kiddy’s saving account for me and he’d put my pocket money in there and I’d do as I please with it. If I spent it all in a day it was ok, but I’d wait for the next month before my pocket money was paid into the account. My training wasn’t really complete because I wasn’t actually taught some basic things like saving and giving.

We are presumptuous to think that people will learn how to manage money without being taught. People don’t learn how to manage money by osmosis, they have to be taught and practice it.

Here are a few tips I’ve picked up about personal finance:

  1. Don’t spend more than you earn!!!! Discipline yourself. You don’t really need to watch the rugby match at the pub spending money you don’t have.
  2. If your rent is more than 50% of your monthly salary you are stretching yourself thin.
  3. Always save at least 10% of your salary.
  4. Try and buy for cash instead of credit. Why would you want to have Jet account? If you don’t have R100 for a pair of jeans go without them.
  5. Never buy food on credit, come on, it goes to the loo. Using your Woolies account to buy cookies, haibo!!! Are you gonna die without those cookies.
  6. Always pay a little bit more for debts such as mortgages.
  7. If you get a windfall (e.g. year end bonus), pay a lump sum into your mortgage.
  8. Freeze all credit cards (put them in the freezer!!!) or cut them up and pay them off.
  9. If you are struggling with debt, start paying them off, starting with the smallest and work your way to the biggest. As you finish the smaller debts, go to the next one and add the installment for the finished debt to the next one. If you were paying Edgars R100 a month, and you have finished this and are now paying your Furniture loan, add the R100 which would have gone to Edgars to the Furniture account and this way you will pay this off quicker. Keep doing this until you have one debt left and then put all the money into this one debt.
  10. A friend once told me to find out exactly how much goes where and pay the exact amount. For instance if you are going to develop pictures, find out how much it will cost you, take the exact amount and then pay that. If you estimate everything every time, your mind has the habit of thinking that the change is a saving ,so you go and pick up some nail polish in Clicks.
  11. Set direct debits for your bills. Why charged a late payment every month. That way again, you pay exactly what is owed and there is no change to buy nail polish with.
  12. Pay your bills on the last day so that the money stays in your account for longer. You don’t get any brownie points for paying early. Eskom won’t give you R5 off for paying earlier.
Categories: Money Matters
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  1. June 2, 2011 at 2:34 am

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