1. Check your attitude.

Ever wondered why you spend excessively on certain items? Is it to keep up with the Joneses? If the people with whom you associate judge you by the clothes you wear, the car you drive, or the area in which you live, ask yourself whether you really need those people in your life? Perhaps you are spending money on “comfort items” that you don’t need or cannot afford? If so, you have an underlying habit that needs to be addressed. Or do you suffer from the “I want it now” syndrome? It’s time to mature-up, develop resistance and stick to your goals. Don’t fall into the trap of impulsive buying, and always question whether the item is affordable or not.

2. Make a conscious decision to change.

If you want to know what the next five years of your life are going to be like, look back on the last five. It’s foolish to expect different results from doing the same things. Unfortunately, many people continue with the same spending habits and wonder why they never make any headway towards financial freedom. You need to consciously decide to change your ways before you can put the necessary plans in place.

3. Take stock.

This means investing a solid weekend into sorting out your filing, making a list of what you owe (both the total amount outstanding, as well as the monthly instalments), establishing what your monthly expenses are, and listing all income sources. Draw up a monthly budget and stick to it.

4. Cut back.

Most households have areas where money is wasted. I drive my family crazy by switching the lights off after they leave a room and reminding them to be conscious of their telephone usage. Similarly, avoiding excessive trips to the shops, and making a list of needed items before you go shopping can go a long way towards saving on daily expenses.

5. Understand your weaknesses.

When we are apart, my wife and I are models of financial discipline. Put us together, like when we are on holiday, and the wheels come off. We somehow manage to convince each other that “it’s only money – you can’t take it with you.” The answer in our case is to either agree on a pre-determined amount that we are going to spend, or if we are not planning to spend, we carry our wallets for emergencies only. You will know what your weaknesses are – be honest with yourself, and devise ways to overcome your urges to spend unnecessarily.

6. Get help.

Speak to someone in your circle who is financially literate. They don’t need several financial degrees. Rather find someone who is streetwise and willing to part with information. If you fall short of this, it would be advisable to speak to a financial advisor. Such a person should be able to assist when it comes to more complex matters such as investments, tax, and estate planning. Remember that it is your money and the final decision rests with you. Your long-term goal should be to become debt-free and have sufficient funds at retirement. 

7. Keep it simple.

You can only improve your financial situation in two ways – spend less, and earn more. Since salary-earners are at the mercy of their bosses when it comes to earning more, spending less is the only short-term solution. When you do receive an increase, remember that earning more money without changing your spending habits is like pouring petrol onto a fire – an increase invariably means that you will be able to budget better. Perhaps, think of putting some of it aside for a rainy day, your children’s education, etc. Beware of banks that are willing to give you more credit, which can eventually get you into more trouble.

8. Talk to your creditors.

Contrary to popular belief, the bank doesn’t really want to repossess your car or your house. However, ignoring the problem, should you fall short with payments, will not make it go away. You can approach your creditors with a payment plan, which you must commit to. Paying regularly, even if the amounts are less than the required instalment, shows good faith, and most creditors would be prepared to accommodate you in these situations.

9. Get out of debt.

As soon as you have dealt with your excessive spending patterns, or your circumstances have improved (e.g. by finding a job, being promoted, etc.), attack your debt with a vengeance. Start with your smallest debt first, and pay extra – even if it is only R20 per month. Eliminate one, and move onto the next. Obviously, if you were in arrears, your priorities would be determined by your arrangement with your creditor. However, if you can settle your clothing account in three months instead of six, you will then be able to use that money to claw back the arrears on your bond, for example. Paying 10% more on your bond instalment every month will allow you to settle the full amount in approximately 12 years instead of 20. 

10. No addiction will simply go away by itself.

This applies equally to alcohol, drugs, and bad spending habits. However, like most other addictions, poor financial management can be overcome. Likewise, there is tremendous benefit from spoiling yourself, on occasion, with a restaurant meal or a trip to the movies. You may need to spend time questioning and measuring your expenditure, but in the end it will be worth it. 

Your financial future depends on it!!