But if you’re just starting to learn about managing your money, here are some signs that you’re doing better at it than you may have thought.
You have a steady income If you have a steady job and you earn a regular paycheque, you’re already better off than many people. Statistics SA puts the unemployment rate at 27%, meaning about one in every four adults is unemployed. The reality is, finding work in South Africa is tough.
You know how much you earn It’s one thing to earn a regular income, it’s quite another to be sure about how much you earn. Know how much you receive from your employer and know what you’ll have in your bank account after SARS takes its cut. Knowing these numbers makes it far easier to manage your money.
You know what you spend your money on Once you know how much you earn, it’s important that you know what you’re spending your money on each month. A good idea is to go through all your bank account and credit card statements from the past three months and create a spreadsheet which averages these expenses. In this way, you’ll know that you’re likely to spend, for example, R2000 on petrol and R5000 on rent next month and these expenses won’t take you by surprise.
You pay your bills every month You likely have quite a few bills which you have to pay each month and it can be tough to keep track of them. That’s why it’s common to sometimes forget one or two. By keeping a list, whether in a spreadsheet or written into a notebook, you’ll be able to tick these off each month. Better yet, set up autopays on as many of these as possible. That’ll make sure you never miss a payment.
You’re saving money It’s important that you put some money away every month. South Africans are some of the world’s worst savers with World Bank statistics pointing out that only 6% save enough for their retirement. It’s recommended you have at least three to six month’s worth of expenses stashed away in an emergency fund. Remember the last time you received a doctor’s bill or had to service your car? Did you feel stressed about having to pay the bill? When you have an emergency fund, you won’t feel this stress. Imagine how amazing that would feel.
You’re investing money for your future Saving is one thing. Investing is a whole other priority. Investing creates compound interest, which is when your money earns money. There are many different options for investing your money, it’s important you find the best option for you and start investing as soon as possible.
You’re planning a big purchase in the next few years Whether you want to buy a home or car, or are thinking of taking a trip overseas, it’s important that your money is working for you. You’re earning and saving money so that you’re able to reach your goals, so it’s essential that you set those goals and work toward achieving them.
You aren’t carrying any credit card debt There are some in the finance sector who believe you shouldn’t have a credit card at all. There are others who recognise it can be helpful for building your credit score. The most important factor to realise when thinking about having a credit card is that you’re responsible. Your credit card bill should be paid in full every month, so you should be sure not to spend more than you can afford to repay.
You speak to your significant other about finances It’s essential that you speak to your significant other about money. Finances are one of the top reasons for divorce with disagreements about spending leading to a lack of trust and respect. It’s essential for the health of your relationship that you discuss these important issues with your significant other openly, honestly and with respect.
You're keen to learn about money It’s important that you take some time to learn about budgeting, healthy financial habits and investing. It’s only when you’re learning that you’ll find out important factors like prospect theory or examples of confirmation bias – our tendency to learn new information which supports our initial feelings or perceptions.
You don’t feel stressed about money If your money goes into your bank account and out of it each month with you hardly thinking about it, you’re very likely better with money than you think you are. When you’re bad at managing your money, you’ll find you spend all of your time worrying about what you have left, when your next payday is and how you can pay off debts when you are finally paid. Studies have found that a massive portion of people feel stressed about money, leading to them not being able to concentrate at work or pay attention to their loved ones.
That’s no way to live. If you don’t think you’re especially good at managing your money, it’s important that you take some time to learn about it. Your future self will thank you.