One of the best resolutions you can make for 2017, or any year for that matter, is to manage your finances better. Not only is this a good resolution to make, but it’s not complicated. Financial freedom, stability, and even wealth generation, can be developed over time by following a few easy maxims.
31 March 2015
Getting into financial difficulty can be very easy and is the result of a number of things such as retrenchment, the death of the breadwinner, reckless lending and sometimes very poor financial choices.
Many people in South Africa face challenges and as a highly indebted consumer nation, it is time we have a rethink of our personal financial strategies.
Be the CEO of your own life!
Firstly, your approach should be that you need to see yourself as the CEO of your own life. Your personal finances deserve the due diligence, vision, focus and care that a CEO of corporation gives to his company’s finances and reputation.
With this in mind, here are 6 steps that can help you come out of your financial difficulties.
Step 1 – Determine exactly what your financial goals are
This could be to get out of debt, to save for the education of your children, or even to save should there be some impending medical emergency. It is important to have a goal because this way you streamline your approach and you know where you are going and can correct any changes and behaviours that do not take you to your goal.
Step 2 – Write down your goals
Once you have written down concrete, time bound and actionable goals you need to then analyse your current financial circumstances. This will help you see what the problem is and where it comes from. Getting a second opinion may be sought from a spouse, financial planner or debt counsellor.
One must always draw up a budget, like a company CEO would, so that you know exactly what your income and expenses are. You then have to determine where areas of wastage are occurring
Step 3 – Finding and presenting the solution
Solutions to these problems can often be determined by a debt counsellor in the face of a consumer taking on too much debt. A debt counsellor can renegotiate your monthly debt instalments and can assist in drawing up a monthly budget. A financial planner can create an investment portfolio which can assist with having a plan for your children’s educational needs which can be very high.
Step 4 – Make a decision
Once you have come up with an acceptable solution it is important to make a decision quickly. It is of no use to take half-baked measures or to enter into an agreement without trust or conviction with your solution.
To see results from your solution, patience is required. Always have a long term view of things because short-sightedness with regard to personal finance is often what gets people into financial difficulty in the first place.
Step 5 – Use and stick to your strategy
Properly implementing the strategy is the key to success.
If for example you know that you spend too much on credit cards then perhaps reduce the limit with your bank. Within families where there are two breadwinners; frank and honest conversations need to be had to get all members of the household to rally behind the leadership to get back on track financially.
It is of no use for one member of the house to be implementing sensible financial measures while the other spends recklessly. There are a many things that can be done to cut down your costs efficiently without disturbing the quality of your life too much – you just have to think about them.
Step 6 – Review your budget
It is important to make a quarterly, semi-annual and annual review of your performance.
As the CEO of your personal finances you need to produce results! Having the correct information at hand will be useful and being able to chart your performance will help you with your decisions. Have your calculator, your bank statements, the bills, a pen and paper at hand and crunch some numbers.
Draft a report that you can present to another family member and be open about the state of your finances. Do not be afraid to approach industry professionals such as debt counsellors or financial planners for further assistance; even heroes like you sometimes need help!
If you are in need of professional help in order to get back on track with your finances, DebtBusters expert debt counsellors can help you. Call 0869 99 06 06 and speak to a consultant today. Alternatively, if you are looking to secure your financial future, Insurance Busters Financial Planners can help you make the best financial decisions for your future. Call 0860 99 40 96 to speak to a financial planner.