Financial Advice from Someone that Needs Financial Advice

Every year, I choose one main theme or goal to focus on. 2019 was based on health and enjoying exercise – making it part of my life and moving away from fad diets – blah, blah and blah. This goal continues (#JustDoItVibes). But 2020’s goal is getting my financial health in order or taking steps, cultivating habits and making decisions to help future financial me.

So, at the beginning of the year, I saw a financial advisor who gave me an earful about where I was and where I needed to be financially. Here is some of the financial advice (dispensed at this session) to you, from someone that desperately needed expert financial advice.

#1. Get a Budget

If you don’t have a written or digital budget, get one. The financial advisor said in his 20 years-plus-experience, only the people who wrote their budget (digitally or physically) stayed ahead and remained ahead. He also said many of his clients say they have budgets in their heads. This does not help you smash goals long-term. You can’t track spending habits and the little things in your head, and it is also the little things that add up.

Whether it be a simple budget in a notebook, a middle of the road budget app or a complex spreadsheet – get a budget today.

#2. Envelope Method

Divide your money into categories. The financial advisor told me a story. When he was eight, he would rush home from school every Friday, grab his bike and ride to his Ouma’s house. He would get out gear and mow the lawn. After the job was done and he “earned his keep”, he would go to Ouma who had a pack of envelopes in her closet. One had his name on it. Every week she would remove a R5 note (yes not a coin in those days) from his envelope and would pay him. The financial advisor said this “method” or concept is one that consistently works best.

Now, you don’t have to get physical envelopes out and withdraw your money for this method to work. With some banks you can have your money automatically placed into categories – you can have debit orders set for your money to automatically be pulled into different accounts. Or you can get an app where you can track your money; making sure it remains in the categories. Example of categories: groceries, entertainment, pets, insurance, rent, fuel, gifts, car maintenance, health and beauty, savings etc.

This envelope method helps you manage money and help save money in each category; especially when you never feel like you have money to save.

Hot tip: Capitec’s banking fees are super cheap – so you can totally use their accounts as your envelopes.

#3. That Money App

Get the 22seven app. The financial advisor said if I was serious about change this was an easy step to prove it.

Not only does this app link to your bank account in a secure way but it automatically assigns your money into categories, creating patterns over time. You can also rename and adjust categories to make them super accurate, set up goals and check whether it is safe to spend. This is an easy and instant step to getting healthier financially.

#4. Retirement

The reality is that the majority of South Africans can’t afford to retire. The advisor shared with me that in his experience that lower-earning clients were better off and had more put away than the higher earners/ director-CEO types. The top earners often have lifestyles that are crazy to maintain. This keeping up of appearances means there is no space to set aside money to retire.

This was a “taai” reality “klap” because it is easy to say – “I will save for retirement when I am earning more or moving up the ladder”. His advice was even if you start small, start today – get a retirement plan from an accredited institution and start saving whether your employer is helping you or not.

#5. Saving

Another slap in the face was advice about savings. At any given time, you should have six months of your salary saved. This is the general rule accepted by institutions on how much is the minimum that should be at your disposal for emergencies or if you get retrenched. The problem is we have emergencies, we don’t have savings – we go into debt. We try to recover. We struggle. Life happens again and then we are in doodoo again. So, number one is, get that budget; be merciless in paying back your debt and start saving so that the vicious cycle can be broken. There are debt counsellors and financial advisors that are willing to help – so reach out and start saving (your life, your money and your sanity).  

#6. Charity Starts in the Roost

Everyone knows it. Stingy people love it. Charity begins at home.

If you are stingy as … and struggle to help others, please skip this step and read no further.

Now, to the people that give generously, invest in others, donate to charity and support causes – well done. But don’t do it at the expense of your financial wellbeing. You can’t help the whole world by killing yourself. There needs to be balance. So, before you help every person that asks, or donate to every charity that touches your heart – stop and remember charity begins in the roost.

#7. Maximise on Benefits

Join every free benefits programme that there is (or start to use the ones you are forced to pay for like some of the bank ones – we won’t name and shame at this time). The advisor said people underutilise benefits and this is a great way to stretch your budget. Use coupons or discount vouchers, join rewards programmes at the supermarkets, chain stores etc. and make sure you maximise on them. Swipe for loyalty and redeem. Don’t think “what difference does 50 cents make or saving 5% make”. It makes a difference according to the experts.

#8.  Why you are Poor

There are one of three reasons why you are struggling financially according to the advisor. One, your lifestyle is more expensive than you can afford. Two, you are not earning enough. Three, you lack the right knowledge and/or skills when it comes to your finances. Most people assume it is two. Heck, they firmly believe it is two (everyone complains about not having enough moola). But even managers, CEO’s and politicians will tell you, they do not earn enough. The more you get, the more you need to pay for and the less you have.

The financial advisor said that in his experience, it is usually one and three (and most people still think it’s two). It comes back to what was said previously – the people who earn the most, usually can’t retire/save, and are sometimes worse off financially. So, the aim is not to earn more (or you will never earn enough) but manage, work with and be faithful with what you have. Then if you get more (or earn more), you will be able to work with more, save more and ensure you can be more financially stable.

These eight steps may seem basic to some. They may seem unachievable to others. They are not supposed to discourage you (at first, they can); it’s to get you thinking and to make the small decisions today that will impact your tomorrow. Start small, dream big but take the consistent steps now before “one day” is here and you aren’t prepared. So, here is to smashing 2020 goal

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2 thoughts on “Financial Advice from Someone that Needs Financial Advice

  1. I love the 22Seven app. I think it’s one of the best things to come from Old Mutual. You can also use it for tax free investments.

    Great article!

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