- Secure your job: for most people, their main asset isn’t property or an investment. It’s their ability to generate an income.
- Bring in more money. Even if it is not exactly stipulated in your job description, think of ways you can make and/or save more money for your company. Make yourself indispensable by tackling tough projects.
- Beef up your CV. Talk to recruitment agencies about skills and qualifications in demand in your industry. Invest in training and further education.
- Network with a purpose. Join a professional organisation in your industry. Get a mentor in your company to guide your advancement.
- Consider a career change or ways to get a second income.
- Draw up a budget: without it, you probably won’t be able to live within your means.
- Keep a day-to-day diary of your spending for at least a month. Then gather all your bank statements (plus bills and accounts) of the past six months to get a clear picture of where your money goes.
- Understand what your net income is. What do you earn after deductions (pension fund, medical scheme, etc)? What other kinds of income do you earn, for example from your investments or rental?
- Now make a detailed list of all your outgoings. Start with fixed expenses: insurance, monthly investments, membership fees, mortgage payments, shop accounts, childcare and bank fees. Move on to daily and weekly expenses: petrol, food, coffee, newspapers, cigarettes.
- Go through your spending diary and bank accounts to identify expenses which differ from month to month: veterinary bills, trips to the hairdresser, clothes. Try to calculate what your average amount of variable spending is each month.
Now, using all of this information, draw up a statement of your monthly income and spending. Make sure you are saving at least 10% – preferably more – of your income. If your expenses are more than your income, decide where you are going to cut spending. If there is no obvious way to do this and your creditors are putting increasing pressure on you, perhaps consider going for debt counselling.
- Review your retirement investments: contributing to your employer’s pension fund probably won’t be enough to maintain your current lifestyle – and cope with spiralling health costs – after retirement.
- Get professional advice from an accredited financial planner on the value of your retirement investments, and whether your current level of investment will be enough to see you through retirement.
- Make sure your investments are diversified and suited to your risk profile.
- Your money should be spread over different asset classes (cash, bonds, shares and property) and should preferably be exposed to global markets.
- When deciding where to invest, many investors fall for the latest trends. “Take care because even experts struggle to predict the future.”
- Also, make sure that when you decide to invest more money, you are not over-exposing yourself to an area where you already have investments.
4. Ditch debt: short-term, bad debt (with high interest rates) is toxic. Get rid of it.
- Make a list of all your debts (excluding your home loan), listing them according to the interest, you are paying.
- Identify your most “expensive” debt (with the highest interest rate) and start paying more than the minimum payment each month. Go through your budget to see where you can cut spending to allocate more money to pay off this debt.
- When the top priority debt is settled, move on to the debt with the next highest interest rate and pay it down, and move down your list until you have settled all your debts.
- If there is no way of maneuvering your budget to cut your debts and you are struggling to pay the minimum amounts as it is, talk to your creditors and try to work out better payment terms.
- Alternatively, consider approaching a debt counselor.
- Many people struggling with payments think debt consolidation is the answer. Debt consolidation usually means that you increase your home loan, or take out a new personal loan, to pay off your existing debts. But if debt consolidation doesn’t mean that you are paying less each month to settle your debts, it is not a viable option.
5. Get insured: not a sexy way to spend your money, but worth it.
- Life insurance – The primary purpose of life cover is to take care of your loved ones and settle debts (like your home loan) after your death. The cover should provide money for your spouse to live on and to educate your children. The earlier you take out life insurance, the less you will pay. Get a range of different quotes for life cover to secure the best deal.
Disability – Disability insurance policies will pay out if you can’t work any more. There are many kinds of policies. Some will pay a lump sum if you are permanently declared unsuitable to work.
Others will pay a monthly income and will also cover you if you are temporarily unable to work. Some will only pay out if you can’t do any work (not only your current job). It is crucial that you understand all the terms and exclusions of a policy before you sign.
- Car and household – It is a highly competitive industry, so make sure you get the best policy on offer. There are a number of online comparison websites that will help.
Medical cover – There are many different plans you can choose from (take a look at your options). When comparing benefits, make sure you understand how much cover will be provided for hospital visits (and surgery), chronic medication and day-to-day cover.
- Rainy day fund: a great way to avoid expensive debt when having to cope with an unforeseen crisis.
Put aside an amount in your budget (preferably set up a debit order) for a savings account or fund. Look for the best interest rate you can find, but make sure it will be relatively easy to get your money out. The aim is to build up at least three months’ worth of your living expenses in a fund. If you suffer a sudden loss of income, or face an expensive emergency, you will have some money to tide you over.
- Get a will: without it, the fate of your children and assets may be decided by the authorities.
- A valid will basically entails that each page of the document is signed by you in front of two witnesses (who won’t benefit from the will). They also need to sign the document.
- Your will should give instructions about what should happen with your assets and appoint an executor to take care of your estate after your death. If you appoint a firm as executor, they will receive a percentage of your estate (usually about 3.5%). If you have underage children, you also have to appoint a guardian.
- If there is any degree of complexity in your will, get legal help.
- Be mean: ruthlessly root out all unnecessary spending and get in touch with your stingy side. It will pay off.
- Go through all your expenses. Where can you save money? For many people, gym memberships (how much is that single monthly workout really costing you?) do not make economic sense. What luxuries, like daily extra large coffees with little chocolate sprinkles, can you cut out?
- It may be time to switch your bank to save on costs and earn higher interest. The rates and fees on offer are getting more competitive, with smaller players like Capitec, Virgin and Woolworths also trying to get a piece of the action.
Make sure you are not paying too much for your car insurance. Your car loses value every year, and while you may still pay premiums based on the original purchase price of your car, the insurer will only pay out the current market value. (The opposite is true of household insurance – while you may have insured your house contents for a set amount a couple of years ago, it may cost much more to replace your belongings now.)
- Step up security on bank accounts, credit cards and internet users.
- Make a habit of going though your bank statements at least once a week to check for any illicit activity.
- Change your passwords regularly.
- Use up-to-date antivirus software as well as other programs that will remove Spyware from your computer.
Don’t ever respond to any unsolicited e-mails.
- Invest in your relationship: divorce will be a serious impediment to financial planning, investment portfolios and overall health, wealth and happiness.
Find out more about what you can do to boost your relationship with your partner. “Then invest time, energy and money to do these things and you will be happier, healthier and wealthier.”