BE FRUGAL

There’s no secret or easy fix here. Achieving financial security in these difficult times requires sacrifice and self discipline. But, the effort is worth it. You can’t put a price on the peace of mind that comes with knowing that you can provide for yourself and your family. And the lessons and skills learned now will be equally valuable when the rand strengthens and things improve, as you will already have acquired the skills needed to grow your wealth.

The bottom line is that you have to be frugal. Inflation is going to push up the price of everything, and you are going to have to cut costs if you even want to afford ‘the basics.’ Find ways to save on your water bill, save on electricity, and save on your grocery shopping. But most importantly, be prepared to give up some luxury expenses. You can save more by cancelling an unused (or barely used) gym contract than by conserving water and electricity. And remember: you’re saving for financial security.

LEARN TO BUDGET

If, up until now, you’ve worked out your monthly budget in your head, you might want to revise the way you spend your money. While mentally crunching numbers might help ensure that you have enough money to last till the end of the month, it won’t help you identify areas where you can save and cut costs. It’s only when you put all your expenses on a spreadsheet that you realise how much you are spending on certain items, and how much you could save if you went with a cheaper alternative.

That, of course, means first tracking your expenses. If you find it difficult to keep record of your spending, you can use a budgeting app like Vault22. To get the most of these innovative time-savers, it helps to swipe for purchases instead of paying cash, as this will ensure that your app can track your transactions and assign them to your different expense categories. If you have never used a budgeting app before, this can be an enlightening experience. You might be surprised by how much you spend on pay-as-you-go data or KFC. For more tips on how to manage your budget, see our article on budgeting.

REIGN IN YOUR DEBT

Debt is going to become more expensive, and it would be a mistake to take out a loan for something that you don’t really need or isn’t helping you improve yourself. Many of the things that people are convinced they need are only necessary for keeping up the appearance of ‘success’. Don’t be one of the millions of South Africa who try to live beyond their means.

Keep your debt to a minimum. And if you are heavily in debt, do everything you can to drastically reduce your debt (or eliminate it completely). Many South Africans find themselves saddled with too much debt after a family member gets sick or their vehicle breaks down. If you find yourself in this position, where it’s difficult just to make minimum payments, you need to get drastic about cutting expenses so that you can pay back your debt as fast as possible. See our article on how to get out of debt with a repayment strategy (link to blog).

SAVE FOR A RAINY DAY

If you don’t want to have to rely on a loan in a time of emergency, you need to put aside an emergency fund. It might take some time to build up your substantial rainy day savings, you can sleep easier knowing that you’re prepared for most of what can throw at you. So, how much should you have in your emergency fund? Read our blog on how to create an emergency fund for some specifics.

Of course, you shouldn’t stop with an emergency fund. You also have to think about your future. Most South Africans don’t put away enough for their retirement, and, as a result, they have to get used to a lower standard of living after they retire, often relying on the support of younger relatives. To ensure that you can support yourself in your retirement, you need to start putting your money into some kind of long-term savings plan or investment.

GET MONEY SMART

We spend 12 years in school learning the skills that will ultimately help us earn a salary or make a profit, but how many of those classes are dedicated to teaching you what to do with your money once you’d earned it (no, home economics doesn’t count)? The point is that it’s quite possible to go through life without getting any real money advice. And that’s where this series comes in.