Managing finances key on way to financial well-being

And just like that the first quarter of the year is gone.

Time flies by – whether we’re busy or not, aware or unaware. However, what remains is how we move forward to ensure that we and our families have a secure future by saving. None of us can ever run away from the reality of the rising cost of living. As consumers we are constantly having to find more money to pay for this and that.

This week, we’ve been hit with two increases on electricity and petrol. In the next two months or so, many bus companies will announce annual increases in their fares. One wonders how much longer it will be until the taxi industry does the same.

If like me you’ve tried lift club and it did not work out due to different working times or other reasons, you’ll be left with no choice but to use your car or public transport. Food prices are also on the rise. We are not spared anywhere.

With that said, many may start to look at their budgets and wonder if they will be able to keep up with their savings goals and meet their targets.

A review of your savings goals is important because when you do, you’re able to make necessary adjustments. Remember to set realistic goals.

“Managing our finances is a gateway to financial well-being,” says Doret Jooste, head of money management at Standard Bank.

So, how often do you reflect on your savings goals?

With the first quarter of the year gone, how are you doing? Are you still on track or have you opened your savings box?

How you’ve fared will guide how you move forward to ensure you meet your target.

Jooste says people must be encouraged to “proactively think about their finances”.

“This includes gradually acquiring the knowledge, skills, attitudes and behaviours necessary to make sound financial decisions and ultimately achieve financial well-being, and financial resilience.

“The first months of the year can place multiple financial demands on us, leaving us financially strained. However, it also provides us with an opportunity to reflect on our finances and set realistic and achievable financial goals for the rest of the year.”

Jooste gives tips on what one can do to get started:

Reflection is very important: Start where you are. Reflecting on our current financial position will help us identify our key priorities as we set our goals. This includes, evaluating our debt obligations, checking if we have enough savings to help us cope with emergencies, drawing up or updating our budgets to accommodate all our current monthly commitments and establishing if there are any long-term financial goals we need to start considering.

Setting realistic goals: Set financial goals and consider breaking them down into three categories: short-term (achievable within a year), medium term (three-five years) and long-term goals (beyond five years). Examples of financial goals include repaying debt quicker to reduce interest and free up monthly cashflow, or saving to build three months’ worth of monthly expenses for emergencies and setting personal goals such as saving towards an education, future vacation like December holidays, retirement, etc. Reaching our goals can be made easier by automating our savings to prevent spending unnecessarily and to ensure our savings grow.

Draw up the right budget: Setting realistic goals based on our current circumstances and having a plan of how we will reach each of our goals helps minimise financial stress. Our budgets should include all our incomes – whether from side hustles, stokvel payouts and the likes, fixed expenses such as debt repayments and variable expenses such as groceries, utilities, entertainment. It is advisable to include savings as part of expenses in our budget to avoid leaving it unplanned for.

Set limits on spending: Setting limits on our spend, tracking monthly spend against budget and aim to spend less than we earn. Tracking helps us stay on top of our finances. Some banks and financial institutions offer free budgeting and tracking tools which can help to categorise, track and set limits on our spend.

Option to make payment arrangements: After reflecting on our finances and we may find that we are struggling to meet our monthly obligations, we’d then need to review expenses to prioritise needs and reduce any wants. We may also consider reaching out to financial institutions that we owe money, to understand if there are options to arrange for repayments that suit our current affordability.

mashabas@sowetan.co.za