Your personal finance journey may not be the same as your sister’s or mother’s, as there are individual factors that can impact the financial planning choices you make.
Once armed with proper financial information, people can stay on course over their financial wellness journeys, says Katlego Gaborone, a financial planner at Momentum.
– Speak to a financial adviser who can assist you in planning and setting realistic goals, as well as provide guidance on how you can invest your money.
– Pay off all of your debts, including student loans, as quickly as possible.
– Draw up a budget and stick to it – only buy what you need, and pay cash for it if you can.
– Start your own side hustle as a way to earn an extra income. You can use the money to pay for expenses, pay off debt or to invest.
– Invest your money, even if it is a small amount, and earn compound growth.
– Don’t cash out your savings when switching jobs; instead, re-invest the money.
– Have three months’ salary put away in an emergency fund in case disaster strikes and you need the money.
– Make sure your credit score is healthy. A good credit score means banks will grant you a loan at a lower interest rate when you need it. Paying back the full amount due on your credit card — every month and on time — will benefit your credit score.
Money tips for your 30s
“For many, this phase is when families are started, and long-term investments are made. Think ‘save’,” Gaborone says.
– Think about investing long-term and consistently.
– Diversify your investments, instead of putting all of your eggs in one basket.
– Bulk up your emergency fund so you can handle any financial emergency.
– Make sure your credit card is paid in full every month, and avoid bad debt — such as clothing accounts.
– Think comfortable, not extravagant. So don’t use up all of your savings when buying a house. Leave some wiggle room for when the unforeseen happens and you can’t pay your mortgage.
– Ensure that your life insurance and income protection policies can provide for your whole family.
– Have an updated, executable and valid will to provide for your spouse and kids in case something happens to you.
– Spend less money than you earn and save; your future self will thank you.
Money tips for your 40s
Gaborone says many in this bracket are focused on saving for their retirement and living a comfortable life.
“Balance living and spending with saving and investing.”
– Increase the contributions you are making to your retirement savings.
– Let tax work for you.
– Check the beneficiaries on all your policies.
– Review your insurance policies and will.
– Speak to your parents about their finances.
– Pay off soonest any debt that has a high interest rate.
– Treat yourself by going on that dream holiday, or doing those home improvements that you have been putting off.
– Teach your kids how money works, including good saving habits.
– Have an education policy for your kids for their future studies.
“Even in these difficult times, there are many ways to counter falling into financial despair, and we are optimistic that, with the correct financial literacy and planning, South Africans can prosper,” he says.