“How you come out on the other side of the year depends largely on your spending habits. People manage their finances differently - there are those who spend and worry about the consequences later and those who are very cautious about how and where they spend their money,” says Eunice Sibiya, Head of Consumer Education at FNB.
According to Sibiya, it’s important for people to conduct some introspection and understand the type of relationship they have with money. “That’s one of the ways to avoid having a financial hangover at the start of the new year,” says Sibiya.
Here are some of the money management styles:
These are people who avoid thinking about money and never keep track of where their money goes. They often spend more than they earn and find themselves in debt.
The big spender
This type cares about status, their wealth is permanently on display by spending on premium brands. They practice little caution about what they spend their money on. They refer to themselves as being adventurous; such individuals rely heavily on debt to finance their extravagant lifestyle and take a gamble on uncalculated ‘investments’ in search of a quick buck.
These are firm believers in retail therapy; they consider shopping as a hobby and a form of relaxation. They always want to be seen to be setting trends, and often make impulse purchases on products that they don’t need. These types are often aware of their addiction and are concerned about it, but they never take any remedial action. They hardly ever have anything left to save and invest for the future.
These are often over cautious about where and how they spend their money. They stick to a strict household budget, love a good bargain and avoid making luxury purchases. They are not risk takers and are often scared of the thought of losing the wealth they have accumulated.
These are people who are smart with their money. They are well aware of their financial status and live within their means. They make careful and balanced decisions with their investments. Most importantly, they make money work for them and aim to have a diversified portfolio of investments to cover future needs.
“How you manage your money has an impact as to whether you accomplish your financial goals or not. Consumers are encouraged to set financial goals and work towards meeting them within the set time frame in order to achieve financial freedom,” concludes Sibiya.