Smart ways to save money

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Are you finding yourself broke a few days after pay day? Lerato Mogoatlhe shares secrets on how to make your money go further.

Account for your finances: This is the most basic financial advice. “It’s one thing to budget, but it’s another to actually look closely at your spending,” says Friedl Kruger, financial consultant at Summit Finance. “Examine what you are actually spending in different categories, such as rent, groceries, entertainment, school fees and other fixed needs.”

Budget airlines: We all love a getaway but usually stop at getting a quote for the flight –if you book through national airlines. Budget airlines have comfortable economy class tickets at more than 35% off national carrier fees.

Credit cards: Make your credit card cost-effective by choosing a card that suits your repayment habits. For example, if you battle to meet minimum repayments, choose a card with a lower interest rate.

Do like Bill Gates: The second richest man in the world is worth an estimated 61 billion dollars, yet he has no chauffeur and the Gates’ family car is a van. Know where to draw the line in the ongoing struggle between spending on bling and being money smart.

Education and other obligatory payments: Find out what the ‘terms and conditions’ are and try to negotiate a discount for paying cash. For example, some schools offer a cash discount if fees for the whole year are paid in one go, and some have discounts for siblings.

Find a few extra rand, which can go a long way: Paying off your car and bond as soon as possible is one of the best financial gifts you can give yourself, because when it comes to debt, even a few hundred rand added to the minimum repayment can take years off your mortgage and car repayments.

Go generic: Look at your shopping list and pick out items where you would be happy to use house brands, for example, pet food and canned food.

Honesty: Be honest with yourself by getting a real handle on what money is coming in and what money is going out of your accounts. Mind your spending and payment habits.

Insurance: The life cover of a chain-smoking, booze-loving, overweight, 31-year-old woman is higher than that of her clean-living counterpart. Health and habits can increase or decrease premiums. Always compare premiums and packages before taking out any insurance – car, education, and life cover. And bear in mind that you don’t need to be insured for everything under the sun. “There’s no point in having three life policies, for example,” says Freidl Kruger.

Junk: One woman’s junk is another woman’s treasure, says 30-year-old Mpho Lebello from Nelspruit in Mpumalanga. She sold the relatively new furniture she had bought with her ex-husband to finance a new look for her single girl’s pad. The gadgets and trinkets that are turning your house into a junkyard are worth hard cash at swap shops.

Keeping track of expenses: Look at the details, such as trips to the vending machine and the chocolate aisle in the supermarket. If you can’t let go of this habit, then why not buy in bulk? Weekly trips to the vending machine that would normally cost you R323, come out at around R131 at wholesale prices. At R764 per month, that can add up to a whopping R9168 a year in your bank account.

Lion’s share: The king of the jungle eats first, ahead of the pack. What does this mean for you? Well, you can make sure you eat first by having automatic food deductions off your salary. This will help you commit to your financial priorities, which fosters commitment to all your obligations.

Managing money: Handling debt can vary between the extremes of being debt-free or drowning in debt. To avoid drowning, start swimming by using debt management guidelines or see a debt counsellor or financial planner.

Noah’s ark principle: Noah’s story teaches us a valuable lesson in money. Know what your needs are and be prepared to meet them to save yourself any money hassles. It’s the key to saving and self-preservation.

Own: Knowing the difference between assets and liabilities will help you to buy and spend wisely.

Petrol costs: Thabiso Molepo lives in Krugersdorp and works in Sandton. A full tank costs her R482 per week if she drives to work every day. Her tank lasts two weeks if she drives to Roodepoort and then catches the Metro bus for R106 per week, saving her R560 a month. A lift club and the Gautrain are other petrol beaters.

Question time: “The most important question every consumer should ask is ‘are you spending more than you earn?’ See yourself as a business and constantly question if you are making a profit or a loss,” advises Friedl Kruger.

Rhino principle: Managing money successfully can be one of life’s most difficult challenges, but it’s also one of the most empowering things you can do. It starts with behaving like a rhino and taking charge. Learn how to face your budget and debt by taking charge as quickly as possible; you need to plan and identify the risks, pitfalls and limitations that affect your budget.

Smart budgeting: Draw up a budget that you can stick to, as this enables you to see exactly where every cent of your money goes each month. Once you know that, you will have the power to change your spending habits and change the way you work with money.

Tax planning: Find out if your salary package can be structured to give you maximum tax benefits. One way to do this is by splitting your salary so that a portion of it is a car allowance, because only 80% of the allowance gets taxed. Where it comes to investments, dividends from local shares do not get taxed.

Unsecured credit: This is debt best described as borrowing from Phumeza to pay Tokollo. This carries the highest interest rates and fees, making the average person spend 44% of their net salary on repaying the debt. This means that they need another loan to pay other debts, and so the cycle continues.

Versatility: Rapper Jay Z is worth more than R3 billion, yet the brand of cigars he smokes costs R1570 for 20 cigars. The lesson? Being money savvy does not mean you have to compromise on quality.

Web-based tools: Websites such as www.6cents.co.za have programmes that help you control your spending.

X-Factor: Have a money principle that you can have fun living by. Thomas Jefferson’s was ‘never spend your money before you have it’.

Your growth: This depends on earning, spending, saving and growing your money. Don’t stand by idly if you want financial success. Take charge of every aspect, seek help, question, and always remember that knowledge is power.

Zen: The amount of money you have has got nothing to do with what you earn. People earning millions a year can have no money, while people earning meagre salaries can be well off. As American businessman Paul Clitheroe says, “It's not what you earn, it's what you spend.”

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