Live your best life on a budget

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Samke Mhlongo shares ways to make your money work better for you. Pictures: XX

I was surprised over the holidays when family members expressed that they had not expected me to complain about how difficult the past year was. They felt like this because of my social media activity and frequent travel that suggested that I did not have money problems. But, what if I told you that out of the six countries I travelled to, I only paid for one? Or that looking back, while my lifestyle was certainly more lavish, I actually earned less money? So how did I do it? Well my dears, read on because this month I share with you the key tools I used to make my year fabulous on a fraction of the funds.

  1. Plan Your Life (financial planning)

I keep a year planner religiously and write down all key events and commitments for the year. In 2018, I went on less casual outings because I knew that I had several upcoming international trips that would require some funds. One of the biggest reasons many of us don’t reach our financial goals is because we fail to plan our lives and end up making costly decisions at the last minute,  such as buying an expensive baby shower gift on credit. Keeping a year planner helps you to jot down all the important dates in your year, together with the required financial commitment and the timing around these, so that you are prepared.

Pro-Tip: For bigger life events such as getting married, having a baby, or getting divorced, Certified Financial Planner (CFP) Gerald Mwandiambira suggests enlisting the help of a registered finance professional. You can contact a CFP that is registered with the Financial Planning Institute on www.fpi.co.za

  1. Organise what comes in and out (budgeting)

Another way I survived is by keeping an excel spreadsheet of my running monthly cashflows. I organised it by date and detailed the expected monthly cashflows (both in and out), together with the running balance in my account. I found the running budget useful because my income varies, and I was able to tell in advance whether I needed to supplement it by holding more consultations, as well as when my account wouldn’t be adequately funded to honour my debit orders. Therefore, by keeping a tighter handle on my finances, I was more effective with my funds which afforded me a better quality of living.

  1. Score Big! (credit score)

I check my credit score and profile annually as this provides an early indicator of any financial distress I may be undergoing. I cannot overemphasise the importance of checking your FREE annual credit report and score. You can register and download it on transunion.co.za. Keeping a good credit score is important because it forms your credit profile when applying for credit (overdraft, credit card, personal loan, business loan), and it also helps you monitor your financial health; where the lower the credit score, the worse your financial position. Seeing your credit score become progressively worse helps you take proactive management of your finances by seeking assistance from a Wealth Coach (such as myself), a financial advisor or your employer’s financial wellness consultant. Waiting too long may result in you falling into a position where the only way out is debt counselling, which is a highly inconvenient and costly exercise.

Pro-Tip: The are 4 free main credit bureaus in South Africa; TransUnion, Experian, Compuscan and XDS. A clear report from one of these institutions should give you comfort that your profile with all the other bureaus is also clear.

SEE ALSO: 6 ways to maintain a good credit score 

  1. Rate Yourself (interest rates)

In 2018 we were hit with a VAT, fuel price, and interest rate increase that put a squeeze on many people’s finances, including mine. I decided to pay off some debt and therefore prepared an interest rate comparison table to help me decide which one to target first. To do this, list your debt by interest rate, starting from the highest to the lowest. Then direct extra money into paying off the debt with the highest interest rate as that is the most expensive.

Pro-Tip: Interest rates are also very important for savings as well. Make sure the interest on your savings/investment account is higher than the prevailing inflation rate, otherwise your money will buy you less and less over time.

  1. Invest in your brand (personal development)

Perhaps the single biggest investment I made was in myself, through my personal brand. Joining BONA magazine and landing a business slot on radio resulted in several brand influencer campaigns, and paid speaking engagements – both locally and abroad. Social media has made it easy to invest in your brand, but this should be done using a targeted strategy, where your social media platform is used to position you as a thought-leader in a specific discipline.

Pro-Tip: Arese Ugwu (@smartmoneyarese), Founder of Smart Money Africa and author of The Smart Money Woman, is a great example of an entrepreneur that leveraged social media to position herself as the go-to thought leader on millennial money matters. She also used the same platforms to sell her books, which resulted in her having her own TV show and securing paid brand influencer campaigns. 

 Do It Your Way

As with most things in life, not all the tips provided may be applicable to you. But, I trust there are one or two, no matter how small, that you can use in your life to help you make better financial decisions in this year and beyond!