Family Finances: Make sure you’re on top of it
According to the latest Momentum/Unisa South African Household Wealth index, household net wealth declined by 0.9% in the third quarter of 2016. Despite the decrease, analysts found that many South African households have managed to reduce their debt.
It’s good news considering a 2014 Momentum report found that South Africans spent 76% of their income repaying debt. The bad news is that they are still not putting money aside to save for their retirement or a rainy day.
Taking control of your spending is crucial for your family’s financial stability.
Here are a few steps to get your started:
Have a budget
Having a budget will not only ensure you keep track of where your money goes, but it will also help you curb unnecessary spending. Write down a list of all the household’s expenses and income. If more money is going out than is coming in, then you will need to take a serious look at your lifestyle.
Financial diary
Keep track of your daily spending by listing everything you buy in a dairy or notepad. Even the smallest things like a packet of chips should be written down. You will be surprised at how much money you spend on things you can do without, or how much you waste on buying lunch every day instead of making it at home.
Combined accounts
A joint bank account could make budgeting easier for couples. You can pay all your bills from one account and have a better idea of how much money the family has left. Both partners can also have access to the funds, when needed. But joint accounts don’t work for all families. In some instances, you might find that one partner is more financially responsible than the other. It’s best to have a discussion with your spouse about what would be best for your family. If you decide on separate accounts, spilt the bills to decide who is responsible for what expense every month.
Big finance decisions
Don’t rush into making big financial decisions. If you or your spouse is unsure, rather take a few days to think about the decision. Think about the advantages and disadvantages of the decision and how they might affect the family.
Needs VS wants
If you’re over indebted or trying to save money you need to make all financial decisions based on whether you need something or you want it. This will help you avoid spending money unwisely and save more!
Be Fair
If you’re trying to cut back on expenses, don’t tell your partner he/she cannot but a R2,000 pair of shoes but turn around and buy a pair of jeans for the same price. This could cause major problems in the relationship. Secret spending is also a no-no.
SAVE!
Cut back on spending and ensure you save more. You not only have to save for a rainy day, but also for your children’s education (which increases every year), and your retirement. According to a 2015 Finweek report, only 20% of South Africans have a formal savings with a recognised financial institution. You can also avoid debt by saving for something you want versus buying it on credit and paying much more in the long run.
Communication is important, so speak to your spouse openly about the family’s financial situation. If you’re still struggling and feel you need further assistance, it’s best to speak to a financial adviser.