NICOLETTE’S NICKELS
By Nicolette Mashile
As we enter the Spring season, most of us start reorganising the house – putting the winter clothes at the back of the closet, changing the neutral couch pillows and throws to more colourful ones, and even adding some bright flowers to the garden. We even make changes to ourselves, like exercising a bit more, getting a new haircut, and even changing the types of people we hang out with. But how often do we spring clean or review our finances?
Financial goals
Reviewing your finances starts with simply defining your financial goals. Knowing what you want your money to do for you is important. Use the SMART (specific, measurable, attainable, relevant, and time-bound) method to define your financial goals. You may find some of your goals irrelevant or need to be approached from a different angle. By writing them down, you will be able to think more clearly about them when you have everything presented.
Budgeting
Speaking of writing down, one of the most important parts of financial management is budgeting. A budget is a guiding tool on how to spend your money in relation to your income, meaning you should constantly be referring to it with every transaction that you make so that you stay on track. Having a budget in place will help you achieve your financial goals like buying a house, going on holiday with friends, or becoming completely debt-free. But what we tend to forget is that we cannot make one budget template and keep to it every month. With the new season, we need to renew our budget so that it takes into account those increased bank charges, increases in petrol prices, the expenses for the new baby on the way, or the graduation ceremony that you need that stunning suit for.
Emergency savings account
But what happens if you cannot foresee these financial changes? Well, that is why you need to have a savings category in your budget for those rainy days, or better yet, an emergency account for something completely drastic. An emergency account should be savings worth about three to six months’ salary. We saw with the Covid-19 pandemic, the looting, and even natural disasters like the KZN floods that life events are not predictable, and you never know when you’ll need that safety net.
Credit history
Another aspect of reviewing your finances is to check up on your credit history. Not a lot of people take this seriously, but credit bureaus are not always up to date with your credit status. It is your responsibility to get your free annual report and make sure that everything that you have paid up is recognised, and that if you have any high debt items, you start to make a plan on how to pay them off. You do this by paying a little extra to the minimum balance that you have and reducing spending on credit during this time as well.
Spending habits
Speaking about spending, how are your spending habits looking? Are you still buying that expensive organic juice because Phumzile on TikTok mentioned it? Are you still buying clothes just because they look cute and not because they have practical value in your life? I’m not saying that you cannot do these things, but do them within your means. Suppose you are struggling to keep up with your finances, and you find yourself scraping every cent off the ground in that last week before pay day. In that case, you need to re-evaluate the things you buy or pay for, like TV and magazine subscriptions, and start living a more affordable life until the point when your income allows you to be boujie with your money again.
In closing
Spring is a happy season, and you want that to reflect in how you manage your finances. You can speak to a financial adviser if you are not certain how to start. If you are interested in making more investments, then you can also speak to an adviser, who will guide you to decisions that are best for your financial goals so that you can enjoy life’s milestones.
Nicolette Mashile is a TV presenter and a financial literacy expert.