Now more than ever, young South Africans need to start managing their finances and know exactly where the money they have earned is going.
Good money habits starts from a young age and young people in South Africa need to be financially educated early, says Charnel Collins, chief executive of National Debt Advisors (NDA).
To take control of your finances in 2023, follow these five pieces of advice:
1. Be financially savvy
Knowing and understanding your financial choices and options are the first steps that you can take towards improving your financial wellbeing.
From as early as possible, you need to learn about the different financial areas relevant to you. If you are unsure, there are free online resources that can help educate you on financial matters. You can also reach out to your bank for money-related information.
2. Draw up a budget
Important elements of proper financial management include budgeting for expenses, paying off debt, and saving and investment.
Sebastian Alexanderson, founder and debt counsellor at NDA, says budgeting is a great way for people to take control of their money.
“When you budget, you know exactly where all your money goes, where you can make adjustments to save even small amounts, and also how to effectively save and leave enough money for unexpected expenses and emergencies.”
You can start preparing a budget by listing your expenses and income. If the total expenses add up to more than what you earn, you need to cut down your spending.
3. Get rid of debt
You should consider putting any extra cash you receive towards paying your debts instead of splurging on expensive luxury goods and non-essential items.
Becoming debt free is an essential part of financial freedom and it will allow you to put that money you have freed up towards savings and investments.
Whether this extra money is from an inheritance, a bonus, investment returns or winnings from a competition, Farzana Botha, segment solutions manager at Sanlam Savings, says you should put it towards paying off debt.
4. Make your money work for you
After taking care of your monthly expenses, set aside a certain amount for savings and investments. This money can be put away for a big goal such as a holiday or education, or it can used to take care of expenses due to loss of income.
5. Remove the clutter in your expenses
Lots of people may have unnecessary debit orders lurking around their accounts, so it is vital that you re-evaluate your fixed monthly expenses on memberships, subscriptions, and insurance.
There may be memberships and subscriptions that you are paying for but do not use. You should also review your insurance policies and make updates according to any lifestyle changes.
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