How do you turn your finances around? This is the most frequently asked question 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 up your 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 we have taken six readers a year through a financial bootcamp.
What we have learnt 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 faster than you realise. In every case, those contestants who took action and control of their money were able to pay off their short-term debts in fever than six months.
Over the past week, I have been catching up with our latest contestants, and what struck me was how much their money habits had changed. Instead of just sticking their heads in the sand and hoping for the best, they have closely examined their bank statements and they are now actively engaged with their money.
This week, Thuli told me that she updates her budget every Friday afternoon and checks on her spending for the week. This helps her stay motivated and prevents those unconscious spending moments.
“I am more in control now. Before, I would just buy takeaways for the kids, but 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 will also have built up an emergency fund, told me that managing her money had 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 statements and I would never think of checking my credit score. Now I want to know where each and every cent goes.”
In fever 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 the year.
“Before, I didn’t care about budgeting. Now I am watching my money rather than just swiping my card.”
Within six months, 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, Tamsin now has a clear idea of how much money she actually needs to live each month.
“I am feeling so motivated about my money – I don’t even want to buy anything that is not necessary,” says the self-confessed spendthrift.
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 all the payments and debit orders had gone off. I was thinking to myself that my financial adviser would not have much to work with as I didn’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 the necessary expenses that I have.”
Amanda has been able to find R2 600 a month to save.
If you want to know how you can turn your finances around, follow the journey with us.
Go on to the Money Makeover pages on City Press’ website, Money Makeover special report, to find out how our contestants learnt to budget, create a debt repayment plan, say no to family demands and avoid overcommitting.