Mapalo Makhu helps us get our money habits right!

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Mapalo Makhu
Mapalo Makhu

Mapalo Makhu, author of You’re Not Broke, You’re Pre-Rich, money columnist and founder of Woman and Finance – a personal finance blog, is passionate about breaking the barriers that make financial literacy intimidating. She shares a few basic money lessons that we first need to master before reaching the financial Promised Land. 

On money and discipline… You first have to go back to asking yourself the following questions: What is my money mindset? What do I associate money with? How do I feel about money? What informs my decisions where money is concerned? Am I handling money similarly to my parents? Growing up, adults told us that money didn’t grow on trees, and that there wasn’t enough to go around. We never questioned that. Without being conscious of it, we carry these connotations into adulthood, and mope around with feelings of money guilt and shame. I remember a client saying that when she was young, whenever her poor cousins came to visit, her mom would always give them all their new clothes and toys. As a result, she grew up assuming that if you invest in nice things, others have the right to take them away. So, as an adult, she resorted to hogging and not spending all her money.

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On money theories to be careful of… Money has energy. Once you come into some, you may want to splurge all the time, and end up not having any. Always exercise discipline when handling money. I once did an exercise with a client whose husband was taking care of all the household necessities. She said an overwhelming urge to spend would sweep through her body whenever she spotted her bank card in her purse. I asked her not to touch it, and allow her money to build up. Her thinking was that when the next payday rolls around, there must be zero funds in her bank account.

On having money goals… People often say, “Mapalo I have X amount of money; where should I invest?” My answer is always, “What are you trying to achieve?” Back up investing and putting money away with a goal. In that way, it will be easy to save towards something, and not obsess about it. The truth of the matter is that if you don’t make decisions about your money, you will forever work for and chase it. Always pause, and map out your goals!

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On being clued up about your investments… Some people would rather opt for an education or endowment policy because that’s all they know. For instance, these have a shorter investment span, and come with a lot of maintenance fees. I think people generally don’t understand how investments and compound interest work. You need to commit to digging a little deeper if you want to think differently about money.

On being patient with your investments… Some people will never become millionaires – not because they don’t have the money, but because they are simply impatient. Becoming a millionaire or billionaire is not only reserved for people brave enough to start businesses. A normal person working a nine-to-five job is capable of becoming one. However, our biggest enemy is instant gratification. Most people never take the initiative to put money aside because they are always looking to make a quick buck.

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Too deep in debt to care about saving and investing? Mapalo recommends the following:

  • Assess your overall debt. First pay off the debt/s with the highest interest rate or target the smallest, and then move to the bigger one. Paying off one debt gives you the confidence and boost to tackle the next one.
  • Build an emergency fund. This should equal at least six months of your salary. Your debt elimination plan is worth very little without an emergency fund. Think of it like this: you’ll find yourself resorting to debt each time an unexpected event that requires money crops up.
  • Have an annual savings target. This will push you harder to save – even if it means taking on another job. Sometimes, people focus so much on their salaries that they completely forget about other means of earning an income. *Enter moonlighting!*
  • What are you saving or investing for? Remember that there is a big difference between the two. Saving is short term, and is money that you will most likely spend. Investing, on the other hand, is so that you don’t ever have to work a day longer in your life.
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