by Sylvia Walker, author of SmartWoman
I am not a great believer in New Year’s resolutions, as they generally tend to be forgotten within a week or so! But what each new year does bring us, is a time of reflection, and from a financial point of view, a desire to perhaps improve ourselves over the next twelve months.
I remember many years ago living in rented accommodation that was not in the best part of town. I was working in my first job and the property was an investment belonging to a family member. I had agreed to rent the property from her, as I needed an affordable place to stay and she needed a good tenant. However, it soon became obvious to me that this wasn’t the area that I wanted to stay in for any length of time. As the new year approached and I had been living there for two or three months, I vividly remember promising myself that I would not be living in the same place in a year’s time. And by the end of that year I had bought and moved into my own home.
What did I learn from this and why do I still remember it so well today? Well, firstly, the situation was so uncomfortable that I really wanted to change it. Lesson number one in life – we make our greatest changes for the better in times of our greatest distress. So the challenges of life often lead us to greater heights.
Secondly, I didn’t just ‘put it out to the universe’ as some whimsical, hopeful wish. I put a plan in place and took action to ensure that my position changed. This had a direct result in me achieving what I promised myself I would achieve.
These lessons can be applied in many aspects of our lives, not least of all in our financial situation. Many of us are uncomfortable around some aspect of our finances - we may feel that we earn too little, or we have too much debt, or we have been let down by others (such as an ex husband not paying child support) or perhaps it’s just that we find it impossible to save, even though we know it’s a priority.
To get on track and make changes that will lead us to financial freedom (which in my view is all about having choices around our time and money) we need to, firstly want it so badly, and secondly, put a plan in place to get there. Action is key. One can read a hundred self help books on money, but without taking action, it won’t make any difference to your life. So what steps can you take that will have meaningful end result?
- Take a long hard look at your money and the way you view it. Do you just spend when you get paid, are you disciplined, do you have a budget, do you value your income and do you make your money work for you (or do you work for your creditors?)
- List what is coming in and where it’s going – I call this a financial selfie. If your expenses exceed your income, there is a problem. If on paper, you have a surplus at the end of the month, yet you can’t save, there is also a problem.
- Based on this information, draw up a realistic budget for your spending. You are now starting to put yourself in the driving seat – you are taking control of your money.
- A critical element of that budget is to commit to paying yourself first. Select a set amount (and it may be as little as R200), put a debit order in place and pay yourself along with all your creditors. Get advice from a professional financial adviser on where to invest.
- Tackle your short term (expensive) debt to bring it down to zero. Debt incurred in buying a home is fine, as you are growing an asset and you need a place to live. But aim to get rid of the credit cards, store cards, etc.
- Experiment with some new behavior. Don’t buy groceries for a week – eat what’s in your cupboards or deepfreeze. Don’t buy any new clothes for three months – this will halve the balance on six month accounts. Cook with fresh ingredients – much cheaper and healthier than processed or frozen foods. Reduce your entertainment expenses – entertain at home or start a supper club with your friends. There are many more examples that will help you cut down on your expenses. I would love to hear about them – drop me at email at firstname.lastname@example.org and share your ideas.
Financial freedom is a result of what we do (or don’t do) - you either set yourself free, or you remain enslaved – it’s your choice. I want to encourage you to take the positive road, make changes in your financial life, and then look back in twelve month’s time to see how far you have come. Keep moving ahead and keep focused on your goal – financial freedom and the choice of what to do with your time and money. It’s a wonderful feeling!
Sylvia Walker is highly skilled and experienced in the financial services industry, having spent a large part of her career as a marketing manager for a blue-chip company. During this time, she worked closely with the media, conducting hundreds of presentations, doing radio and TV interviews and writing many articles for publications such as O, the Oprah magazine, Good Housekeeping / Goeie Huishouding, Sarie, The Mercury, Plus 50 and many others. She left the corporate world at the end of 2014 to pursue her interests further afield. She is also a published author. She contributed chapters on financial planning in Mary Ann Shearer’s Take Control the Natural Way and Nadia Bilchik and Lori Milner’s Own Your Space. She authored Dealing in Death – Ellen Pakkies and a Community’s Struggle with Tik and co-authored Steeped in Blood, the memoirs of Dr David Klatzow, which was shortlisted for the Alan Paton Award in 2011. She also co-authored and published Reflections for Old Mutual in 2013. Sylvia is currently a financial planner, writes articles, and conducts workshops on various aspects of financial literacy and planning. She is also the resident financial guru on the Cape Talk Early Breakfast Show, and is on air every Friday morning. Her latest book, SmartWoman, has just been published, and is a culmination of many years of experience in advising women on how to gain financial freedom and grow their wealth. SylviaWalker.co.za
More articles by Sylvia....