Money Wit’s top 5 tips to manage your money in tough times

Over the past year and a half, we have all been overcome with uncertainty – especially around our financial situation. At Money Wit, we believe that knowledge is the most powerful tool in managing your money. We are here to help you gain that knowledge, reduce the uncertainty and learn how to manage your money so that it does not manage you.

  1. Budgeting, budgeting, budgeting!

When times get tough and money gets tight, your first point of call should be reviewing and reworking your budget.

Remember, must-have expenses cover the things that you can’t live without (a place to live, food to eat, insurance, transport, communication, savings and paying off your debts), and optional expenses cover everything else.

First, get a clear picture of your actual spending. Download your last three months’ bank statements and compare your spending to your budget. If you’ve stayed on track, great! If not, take note of the differences and edit your budget as necessary.

Now that you have a realistic view of your budget and spending, focus on your optional expenses next. Where can you cut back? What can you remove entirely?  With most of us working from home, the use of food delivery apps and similar could be more frequent. This can take a large chunk out of your monthly budget and could be one of the first places to cut back. The last place to look at is your must-have expenses, but remember…

  1. Don’t cancel or cut back things unnecessarily!

As much as you may need to cut down on your spending, be careful not to cut back on things that you need.

Insurance, especially medical cover, is vitally important in times like these. With all of the uncertainty around us, having some form of cover helps you to avoid any additional and unexpected stress and costs. If you are unable to afford your insurance, do some research and then have a chat with your broker or financial adviser about how you can reduce this amount while still retaining the most important cover. Don’t make overly drastic future decisions based on present circumstances – there will be an option available that meets your needs and your price point.

  1. Now, where are you saving money and what can you do with it?

Now that you have reviewed and reworked your budget, look at where you are saving money and where you can put those savings to good use.

The first thing to do when you have extra money is to see if you can either add it to your savings or use it to assist with debt repayments. We are all for the ‘work hard, play hard’ mindset – you want to (and should) use your hard-earned money to treat yourself where you can. However, in times like these, we need to remember our priorities. Set yourself a goal – whether it be saving a certain amount or paying off some part of your debt – and use that as motivation. Once you’ve reached your goal, treat yourself to something new – but remember to make sure that it fits into your budget!

  1. How to manage your debt

If you are in a position where you can’t meet your debt obligations, you can speak to your service provider about the options available, such as lowering your repayments for a few months, or you can look into a payment holiday. Just a word of caution – this is usually used as a last resort. Make sure that you have first exhausted all other options and cut back everywhere else that you can.

Oftentimes these options will have additional costs attached, and you could end up postponing the difficult situation rather than finding a solution for it. If this is the route that you need to take, make sure that you have a clear understanding of all of the terms and conditions and make an informed decision on what will be the best move for you.

Another major part of managing your debt is being aware of how many credit facilities you currently have open. Before you open a new store account or credit card or take out a new loan, take the time to look at other available options. Be careful to not add more debt pressure than necessary, and always double-check interest and administrative costs.

  1. The danger of online shopping and telemarketing

Everyone is looking at how they can make extra money in these uncertain times, including retailers and service providers. The temptation to give in to once-off sales and offers can be huge, but it could also put you in a bad situation financially.

The best way to manage this is to take a few days (or at the least, a few hours) to think about the purchase. Is this really something that you need? Could you get something similar for a better price? How is it going to affect your budget?

Remember, having the money in the bank to pay for it doesn’t necessarily mean that you can afford it. Affordability is about whether or not you have the budget for it, not the facility to pay for it. Even if you are paying an item off over a period, you need to make sure that you can afford the repayments – and interest costs – moving forward.

Breathe

After all of that, the main thing to remember is that your money is just that – it’s yours. Take the time to understand your spending habits and plan.  With a little help, you can take control of your money and be financially savvy.

For more information on how to manage your personal finances, you can find our short courses online through Chartall Business College. Nola Rae, author of Money Wit: Becoming Financially Savvy, covers topics including understanding personal taxation basics, saving and investing, credit and debt and much more!

For weekly tips, follow us on Instagram at @nolasmoneywit.

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author avatar
Nola Rae

Nola Rae, author of Money Wit, started her career in marketing, but was exposed to finances through her job in a company that sold customised financial software to corporate clients.
Fascinated by the logic and power of financial information, Rae decided to shift the focus of her career to finance. She spent 15 years following a corporate career path, with roles ranging from accountant to financial director of one of the country’s largest PR firms. “My years with these companies gave me experience in managing all aspects of a business, from setting up a company, to crafting business strategies, to taking responsibility for the full spectrum of financial management,” she says.

In 2007, Rae left the corporate world to start her own company, Capstan Financial Solutions. She wanted to work with SMMEs, and envisaged her company as something more than a service provider. Instead, she wanted to partner with clients, working closely with them to implement systems and strategies that would help them grow and sustain their businesses. Capstan Financial Solutions has grown significantly during a time of economic turmoil.

Rae’s inspiration for writing Money Wit stemmed from 26 years of acquired industry experience and took her just one month to pen the book. She found her motivation after research into the corporate wellness sector revealed to her the enormous need for debt counselling. Rae realised that the best way to address the need for this service is by equipping people – especially the youth – with a better understanding of money and how to manage it proactively, rather than reactively.

Money Wit is based on a no-nonsense approach that aims to make an understanding of finances and money management accessible to everyone. Simple terminology helps to create a practical, user-friendly guide to getting the basics right; important because, as Rae says, “If we make more informed decisions, perhaps we can make better decisions.”

Although Rae eschews the stereotype of the “grey accountant”, she lives by her philosophy of sound money management. Her best tip for managing finances? “I budget every month, as this allows me to know where my money is going, and I force myself to save money every month. Planning is the most important part of managing your money.”

Rae is currently writing the follow-up to Money Wit, which focuses on guiding entrepreneurs on the fundamental money management facets of their businesses, which they so often hand over to financial experts to manage on their behalf.

For more information about Money Wit or to enquire about workshops, visit www.moneywit.co.za.

Instagram, Twitter and Facebook: @nolasmoneywit
Qualifications / Professional Institutes: FCIS, FCIBM, SABIA, Tax Practitioner and Independent Reviewer.

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