These personal financial management tips couldn’t come at a better time for the millions of over-indebted South Africans.
By applying just some of these personal finance tips you will experience some debt relief and even have more money available.
Everyone should pay attention to their personal wealth management to avoid becoming another slave to debt in South Africa.
However, managing your personal finances effectively is easier said than done when you’re staring down the debt barrel, so let’s get started.
10 Personal Financial Management Tips
1. Analyse Your Debt
It’s not only a prudent personal financial management habit to know exactly where you stand in terms of your debt, but it helps you manage it better.
For instance if some of your credit is costing you way more in interest than others, then you should pay that off first to save on future interest.
2. Know Your Net Worth
In case you aren’t sure, your net worth is the difference between your total asset value and your liabilities, which is the value of your debt or what you owe others.
If your liabilities (debt) exceed your asset value, you are technically bankrupt so keep an watchful eye on your net asset value.
Therefore, by keeping track of your net worth you’ll quickly be able to see whether you’re making progress in creating wealth or, on the other hand, getting deeper into debt.
Knowing this will motivate you to tighten up your personal finances if you need to.
3. Set a Monthly Budget
You’ve probably heard this before, but it’s a vital component of effective financial management.
Whilst it’s quite simple to draft a budget, it’s often difficult to stick to it.
You therefore need to be disciplined not to spend more than you’ve budgeted for in order to create wealth and avoid debt.
4. Cut Up Your Credit Cards & Use Cash
5. Make Mini-Money Goals
It’s too overwhelming trying to get your head around the whole picture of your financial situation, so break it up into mini-money goals.
For instance, setting a goal of saving a small amount every day by taking leftovers for lunch, instead of buying it, will make a big difference if you can manage it for the whole month.
Studies have shown that ambitious long-term goals the less likely it seems that it can be achieved and it’s likely to be given up on.
On the other hand, you will be more motivated to achieve small bite-sized goals which will ultimately achieve the long-term goal.
6. Remain Positive & Dispel Defeatist Money Thoughts
If your personal financial situation is dire and you’re drowning in debt it’s only natural to be pessimistic.
Therefore by saying that you’ll never be able to pay off your debt will assure you of one thing, and that is that you’ll be consigned to a miserable life strangled by debt.
However, by adopting a positive attitude and achieving small money saving goals, you’ll be emboldened to achieve more and soon you’ll be on your way to becoming debt free or achieving more lofty wealth goals.
7. Get Yourself In Shape and Your Money Situation Will Follow Suit
It’s been shown that being healthy and looking after your body makes you more positive at work.
Furthermore, this often leads to improved income as you’re more productive and willing to go the extra mile.
It goes without saying that discipline and healthy money management habits are enhanced by being committed to a healthy fitness regime.
So start training for that marathon, it may have a bigger impact on your personal finances than you would’ve thought.
8. Money Meet Ups
Joining a group of others, or even just a friend, who are also committed to improving their personal finances.
This will not only be extremely encouraging & motivational for all, but associating with others with similar traits can help you pick up good habits & money tips.
9. Unemployment
If you struggling to find a job you could qualify for unemployment pay especially if you’ve previously contributed to the UIF.
So don’t assume that you can’t apply, or be too proud to get paid, as any extra income will only serve to help your personal financial management.
10. Debt Relief
For some people who are so over-indebted and don’t even have any money coming in, there is a solution in the way of the new Debt Relief Bill passed recently.
It is designed to not only help alleviate debt for those consumers, but for some it will allow them to have all their debts written off.
Another option for the over-indebted is to go under Debt Review which will give you legal protection from your creditors and structure a repayment plan to pay off your debt according to your means.
Lastly...
Hopefully these personal financial management tips will not only change the way you think about money, but also encourage you to save, create wealth and live a life free of debt.
Furthermore, I’m hoping that soon you’ll have so much in your savings account that you can start considering investing it in a growth fund or money market.
This will subject it to the power of compound interest as well as market growth which, if invested wisely, will accelerate your wealth objectives and long-term goals.