Five steps to improve your personal finances

Here are five important steps that will make your road to financial security easier.

Five steps to improve your personal finances

Track your expenses. No you don’t have to carry a little notebook and jot down every bar of chocolate or get receipts for your morning coffee.

However you need to keep track of all your major expenses and watch the amount spent on smaller purchases (such as coffee and sweets). By the end of a month you’ll know what expenses are eating up your budget, which gives you the power to make changes to meet your goals.

Create a budget. Outline all the monetary commitments you have made including housing, transportation, food, clothing, entertainment, etc. Now make a note of your goals such as savings and retirement. The golden rule of financial security is to only spend money you have.

That means not using your credit cards unless you can pay them off every month. It is not about making more money but simply living within your means. If you want to spend more money then you need to find a way to either save money in one area or increase your income.

Plan ahead. Some unexpected expenses are just that – unexpected – while others can be anticipated. For example, you know after so many miles that your tyres will need to be replaced. Start saving before the event so you don’t have to use your credit and can take the time to shop around.

Start saving money for short, medium and long-range plans. I start saving for Christmas in January so I don’t have those depressing post-Christmas bills to pay. Similarly I save for holidays so I don’t have to put my fun on credit.

Do your homework. Buy the ‘specials’ at the supermarket. Look at major expenses such as your bond and car payments.

Should you refinance? Should you add another R50 or R100 a month to your bond repayment? What are the tax implications? Doing your homework certainly means researching and shopping for all major expenses as well as recurring bills.

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