NTOKOZO KHUMALO: How turning words into action strengthened my financial position
Money discipline is not easy but it's good habit to strive for
Following two years of interviewing the money gurus, I’m in a better financial position after applying some of the lessons they’ve shared. Here are some of the main ones.
My “new normal” started long before Covid-19 disrupted the way we live and work.
In 2018, I left Business Day TV as a business and finance producer to be a full time mom – a new beat after following stock markets and share picks and chasing CEOs and daily deadlines.
Being a full-time mom was not easy and I was filled with anxiety about the unknown and not being able to keep up with bills and the expenses that come with children.
Less than six months later, desperate for some adult interaction, I joined the Sowetan Money team. It was daunting as although I had savings and some investments, I had some terrible money habits and was nowhere in building sustainable wealth for myself and my family.
But after two years of interviewing the money gurus, I’m in a better financial position and applying some of the lessons they’ve shared. Here are some of the main ones:
It really all starts in the mind
Our relationship with money starts with a mindset and habits we develop over time and how that shapes our money management style.
Writing down my money beliefs, what I think money should achieve for me, unpacking why I spend or save the way I do and how having and not having money makes me feel positively influenced my wealth creation journey.
It’s still tough, but it is easier to say no or to enjoy rewards without guilt as everything is planned.
It’s not always about how much you get but what you do with it
We all dream of earning more to do more and secure the financial future of those close to us. But without a budget, more money means more unplanned spending and staying in the same rut.
Sticking to a monthly budget has, however, helped me keep tabs on my income and expenses.
Recently, I found a calendar that allows me to input for the year my financial data and goals, like a holiday with the family or painting my gran’s house.
Being able to map out my finances over a longer period helps me to plan and deal with unexpected additional funds in some months as well as shortfalls in others.
Pay yourself first
For the longest time paying yourself first seemed like a crazy statement, but then I came to understand that it meant prioritising savings – the key to financial freedom.
I followed through on the advice to set clear savings goals and timelines for those goals, choosing the financial institution that will give me the best returns and automating my monthly savings.
My family and I are now well on our way to having an emergency saving fund that can carry our expenses for at least three months should anything affect our ability to earn a monthly income.
Strengthen your discipline
Despite my best intentions, I still fell off the wagon, dipping into our emergency fund whenever I ran short on our monthly expenses.
To avoid undoing all our hard work, I sought the help of a financial adviser and some family members to be mentors.
Being disciplined doesn’t mean constantly restricting yourself but rather telling yourself the truth about your financial position and, making the best albeit hard decisions based on that information.
Not all advice is worth it
It is important to vet the sources of your personal finance information and adapt the information to fit your situation. It is okay not to act on tips or invitations to a hot new investment if it does not meet your personal preference and wealth creation goals.
Get rid of debt
Debt and trying to get rid of it has been one of my biggest challenges. I’ve learnt to bust my debt by paying more than the required monthly minimums, which helped save on interest and speed up the repayment process.
I used the snowball method, listing all the debts from the smallest to the largest, and when I got rid of the smallest I used it to pay down the next biggest debt.
Selling stuff I no longer needed around the house also freed up cash to pay off debt.
Investing needn’t be difficult
You can start investing small amounts through a robo-adviser; on platforms such as EasyEquities; dip your toe in the real estate market through property stokvels; and set yourself up for retirement.
Find ways to boost your income streams
Despite the security of a partner whose business is able to sustainably pay him a decent salary, as a freelancer I often find myself struggling to meet my own personal financial goals.
I’ve learnt that earning additional income should be aligned to your goals, current employment and talents. This ensures you grow without working yourself to the bone or taking on work that increases your expenses.
Life is more than just money
Often we stress so much about money that we forget about the other joys of life and our own personal well-being. Money is an important resource but has no worth if we’re no longer around to enjoy it.