How do you turn your finances around? This is probably the question asked most frequently by people who are feeling overwhelmed by their financial situation.
The answer is simple: start taking control of your money rather than letting your emotions control you. The day you decide to open that bank statement, work out how much you are spending and create a debt repayment plan is the day your life will turn around.
For three years City Press has run the Money Makeover competition where each year, we have taken six readers through a money bootcamp.
What we have learnt through this experience is that once people take control of their money, things turn positive very quickly. While it requires hard work and discipline, the changes happen far more quickly than you realise. In every case, those contestants who took action and took control of their money were able to pay off their short-term debts in less than six months.
When catching up with our latest contestants, what has struck me is how much their money habits have changed. Instead of being afraid of opening those bank statements, instead of just sticking their head in the sand and hoping for the best, they are now actively engaged with their money.
More in control
“I am more in control now. Where before I would just buy takeaways for the kids, I am now aware that this is a treat that needs to fit into the monthly budget.” Thuli is also taking an active interest in personal finance topics – reading and educating herself.
Samke, who will have settled all her short-term debt by April and is building up an emergency fund, told me that managing her money has become automatic.
“Now that I am used to looking at my finances, it has just become a lifestyle. Before I would never look at my bank statement and I would never thing of checking my credit score. Now I want to know where each and every cent goes.”
In less than six months Nkosi has gone from spending more than her income each month to having R10 000 a month to save. She expects to have saved R150 000 by the end of 2019.
“Before, I didn’t care about budgeting. Now I am watching my money rather than just swiping. I always ask: is this purchase necessary?”
Tamsin has gone from drawing on her business funds during the month to building up a two-month salary buffer. Instead of living off her credit card as before, Tamsin now has a clear idea of how much she needs to live each month.
Motivated to save
“I am feeling so motivated about my money, I don’t even want to spend anything that is not necessary,” says the self-confessed spendthrift who loved spending money.
For Amanda, who was already living on a tight budget, it has been the little wins along the way. “I was feeling very despondent about my financial situation. I had all these very necessary expenses and very little left over after the all the payments and debit orders had gone off. I was thinking to myself – the financial adviser will not have much to work from; there are no gaps or something to work from, I don’t have the usual expenses that can be cut like too many takeaways and coffees. Yet after I met with my adviser I realised that I could look at cheaper alternatives for these necessary expenses that I have,” says Amanda who has found R2 600 a month of savings.
If you want to know how you can turn your finances around, follow the journey of our Money Makeover contestants on the City Press website. Find out how they learnt to budget, create a debt repayment plan, say NO to family demands and avoid overcommitting to a car.
This article first appeared in City Press.