Want to make your money work better for you this year? It’s easier than you think...
1. Make saving come first
Too many of us spend first and save whatever’s left (if anything). But it should be the other way round. Get into the habit of putting a bit of your salary aside before spending. Save a little or a lot, in one lump sum or in small monthly amounts. The important thing is that you save, and find a saving option that fits your life. Changing habits can be hard, so get help by setting up a stop order from your bank into a savings account or by preparing a friendly reminder on your phone to save when your salary is deposited.
2. Work with what you have
Start investing with any small amount – even if it’s just R20 a month – and increase it as time goes by. Also, begin sooner rather than later and look for a bank that gives you good interest rates.
3. Go with good debt
Getting a home loan is an investment; buying clothes on a credit card is debt you don’t want. “Plus a home loan is the cheapest form of debt,” says Phumelele Ndumo, author of From Debt to Riches, and 7 Secrets Why the Rich Own Their Homes. “You are likely to get a home loan for somewhere between 8% and 12% [interest]. But if you have a credit card, you could be paying interest as high as 22%.”
4. Share your home
This is one of the ways you can make extra cash. If you have a spare bedroom in your home or a cottage in your yard, rent it out. This extra income can go towards paying off debt or into your savings.
5. Pay now, not later
This is the time of year when people promise you the world: “Buy now and pay your first instalment later,” say all those car and furniture ads. Don’t fall for it. “If you can’t meet the payment this month, what will have changed in 3 months’ time?” asks Phumelele.
6. Don’t spend your bonus
Look at it as a once-a-year chance to pay off your debts and save. January, with school and work starting, will probably come with extra costs so plan ahead so you can make them sting a bit less.
7. Make it official
Don’t just budget in your head – write it down. You can use a pen and paper or you can use a budgeting tool. It will help you see where your money is going.
8. Play fair
If you’re sharing costs with others – like rent with a roommate or Christmas gifts from you and a friend – don’t get shortchanged. This handy and easy bill splitter will make sure you’re not paying more than you should.
9. Get the right rewards for your loyalty
Store loyalty cards are great: you get cash back for shopping in major supermarkets and big stores. But watch that you are getting a discount for what you actually want. A sign reading “buy 3 shirts and get the third one free” sounds good, but only if you came into the shop to buy a shirt. Otherwise you’re spending on something younever wanted in the first place.
10. Take another look at your insurance
“Rather than have policies for each member of your family, take a single policy for all,” suggests Phumelele. Covering your whole family works out cheaper in monthly payments. And every year, ask your insurance company for a cheaper rate. If they won’t give it to you, find a company that will.
11. Make talk cheap
Look at your cellphone charges. Do you know what they’re all for? You may be able to save money by changing your bundle package or by moving to another network.
12. Know what your bank’s costing you
When was the last time you stopped to calculate how much your bank charges you every month? It’s worth a look, and you might be surprised by what you find. If you feel like your bank is costing you more than it should, then it’s probably time to switch.
13. Start young
Get life cover now – the younger you are, the less you’ll have to pay in every month (and the lower your premiums will be). This is because you’re seen to be more healthy than when you are older, and you have many more years to add to your cover, says Phumelele, which works out for you and the bank.
14. Leave the store credit cards at home
Not ready to cut up the credit cards just yet? Then leave them behind, says Phumelele. “One of the reasons we buy without planning is that we carry our store cards with us everywhere we go,” she explains. Only take them with you when you want to buy something you actually need.