The new year brings with it the promise of breaking bad habits, which also may be financial. Being financially savvy and fit, says Thandi Ngwane, head of strategic markets at Allan Gray, requires commitment.
Ngwane says, “This type of goal may seem completely out of reach, but as with anything in life, if you are willing to put in the work, with a little bit of patience and a few crucial steps, you can improve your finances in 2018.”
If you are looking to becoming financially fitter, here 5 steps to help with your journey.
Step 1: Take a closer look at what you value
Investing may seem like work but the sooner you start recognising your own value system, the more conscious you will be about your finances. To stay committed to improving your finances, consider the question, what do you truly value whether it may be taking care of family, being secure, having a home or providing our children with good education.
You may have other priorities that require more money than you may have in the future, or more money than you earn monthly. There are not many people who can buy a home or educate their kids with just their salary, and the alternative, debt, can leave you in a precarious financial position. Investing can help.
Step 2: Adopt a savings mentality
Your future financial well-being depends on your current saving and spending behaviour. While it may be really tough to make space in an already-stretched budget, taking small steps to develop a saving habit, and a lifestyle of saving, will make a big difference to your future.
One way to get started is with a spending detox. The spending detox is about getting control back by reining in this unnecessary spending and breaking the habit of swiping your card willy-nilly. The detox will aid the change in attitude of how you spend money.
As you go through this detox, start thinking about your savings goals, how long you have to reach them and how much risk you are willing to take on to help you earn investment returns.
Step 3: Start saving early, and account for inflation
You can substantially improve your financial situation if you start saving sooner rather than later. A little really can go a long way. Small sacrifices today can make a big difference over the long term.
A great way to save it compund interest. Compounding makes your money work for you by earning returns today on the returns you earned yesterday.
If you start early and save consistently over long periods, less of your total amount saved will be from your contributions and more from growth.
Step 4: Surround yourself with financial experts
If you are uncertain how to get started, it may be best to speak to a financial adviser. An adviser will ensure that a disciplined savings and investment process is implemented and maintained, thus eliminating any tendency to procrastinate and allowing you to gain valuable time in the market.
It is advised that you approach an independent financial advisers (IFA) as they are not tied to any products or providers. IFAs can make a significant difference to your financial success as they help you make decisions that you can trust, and are right for your circumstances.