THE manner in which one handles finances originates from unconscious beliefs, values and attitudes towards money, experts say.
These are the first things one needs to change when reviewing a personal financial plan.
This month is National Savings Month and it is a good time to review your savings and investment plans.
Keith McIvor, managing executive of core products and pricing at Absa Retail Bank, says leaving things to chance and working without a financial plan is a complete disaster.
"Your financial plan involves goal setting, budgeting, saving, investing, managing your assets, insurance, retirement and estate planning," McIvor says.
"Before working on a plan for your financial future, it is wise to take a step back and look at your attitude towards money and your situation.
"Your financial behaviour originates from your unconscious beliefs, values and attitudes towards money.
"If your attitude towards money is negative, you are not likely to have very much of it, which means that the quality of your life will probably suffer as a result."
McIvor says the first thing to do is to separate needs and wants.
"Needs are things you require to live such as food, water and shelter. Needs change with each season and vary with age," he says.
"Wants are the extras that make your life enjoyable. These are things you like to have but are not necessary to survive."
McIvor says having a budget "allows you to control your money instead of the money controlling you".
It "helps your family strive towards common goals".
Hidden costs like credit card debt should be revealed by your budget, he says.
McIvor outlined eight steps to create a budget:
l Make a list of your monthly expenses.
l Record your total income, including any other money you receive from investments or residual income.
l Subtract your expenses from your income - if you have higher expenses than your income, it means you have to make changes.
l Adjust your expenses.
l Build in money for debt reduction - your budget should include minimum payments that you have to make each month.
l Build in your savings and investments - if you have a lot of debt you may have to skip this step as debt reduction should be priority number one.
l Put your budget to work.
l Assess and assess again - continue to look over your budget every month.