Understanding how your money is earned, spent, and invested empowers you to make informed decisions.
Financial wellness is more than just having money in the bank. It’s about creating a stable, secure, and fulfilling life. It intersects with physical and mental well-being, forming a foundation for long-term peace of mind.
Whether you’re just starting your financial journey or looking to refine your approach, these ten practical tips can help you build a healthier financial future.
- Create a realistic budget
A good budget is the cornerstone of financial wellness. Start by listing all your income and expenses – be honest and thorough. Categorise your expenses into fixed (like rent) and variable (like groceries), and distinguish between needs and wants. If you find a shortfall, identify areas to adjust. Don’t forget to include savings as a non-negotiable line item.
Extra tip: Try and create a “struggle budget” – plan as if you only have 70% of your income. This helps you prioritise and build resilience.
- Develop good spending habits
Sticking to your budget is key. Track your spending, avoid impulse purchases, and always ask: “Do I need this?” If it’s a want, only buy it if your budget allows or save up for it. Keep your long-term goals in mind and remember the opportunity cost of every purchase.
- Build an emergency kitty
Life is unpredictable. An emergency fund helps you stay on track when the unexpected happens. Aim to save 3 to 6 months’ worth of essential expenses. Start small, building towards one month at a time, and remember: a credit card is not an emergency fund.
- Manage debt wisely
Not all debt is bad, but it must be managed. Home and car loans often have lower interest rates and can be necessary. Avoid high-interest debt like credit cards and retail accounts. If you’re in debt, list all your accounts, balances, and interest rates. Focus on paying off high-interest debt first or use the snowball method – start with the smallest balance and build momentum.
- Protect your income with risk cover
Your ability to earn an income is your greatest asset. Ensure you have adequate cover in case of disability or death. This includes income protection, life insurance, and ensuring your debts can be settled to protect your loved ones.
- Understand saving vs investing
Savings are for short-term needs and emergencies, while investments are for long-term goals like retirement and wealth building. Savings should be low-risk and accessible, such as in call or notice accounts. Investments, like unit trusts or tax-free savings accounts, involve more risk but offer greater growth potential.
- Plan for retirement
Retirement means different things to different people. Whether you dream of travel, hobbies, or part-time work, your vision will shape your financial needs. Start planning early and consider how your lifestyle will be funded after formal employment ends.
- Get your estate in order
Estate planning isn’t just for the wealthy. Everyone should have a valid Will to ensure their wishes are carried out. Appoint guardians for minor children, consider a testamentary trust, and choose an executor your heirs can trust. Without a Will, your estate will be handled according to the Intestate Succession Act, which may not reflect your intentions.
- Prioritise financial education
Knowledge is power. Understanding how your money is earned, spent, and invested empowers you to make informed decisions. Financial literacy leads to better habits and greater confidence in managing your finances.
- Stay consistent and revisit your plan
Financial wellness is a journey, not a destination. Revisit your budget, goals, and plans regularly. As life changes, your financial strategy may need to as well.
Remember, financial wellness is a journey, not a destination. Start with one or two tips that resonate most with your current situation, then gradually incorporate others. Small, consistent actions compound over time, leading to significant improvements in your financial health and overall quality of life.
Article by Lana Visser-Galant – Fiscal Private Client Services