Step 7 – How to get money savvy: What is your money mindset

How would you define your money mindset? How do you feel when you look at your finances, earn money, pay bills and talk about money? For many of us money brings up a lot of emotion. For some it can be positive, but for many it is negative. We feel dread when we see bills and guilt when we look at our current bank statement. It is important to become aware of these emotions so that you can process them and work on creating a money mindset that makes you feel good and helps you work better with your money.

Emotions drive a lot of our behaviour and for many of us we don’t always understand our emotions or where they came from. Think about how you deal with money when you are feeling certain emotions. For example, maybe when you feel sad you head to the shops for some retail therapy? Why do you do this? Is it perhaps something you did when you were a child? Did your parents do this? What do you believe about money in this instance? Money is meant to be spent? Money buys happiness?

 

Oftentimes, our beliefs and behaviours around money were formed when we were young and unable to choose what we wanted to believe or do. As we grow up, we continue with these behaviours and beliefs because we don’t know better. These can be destructive to our financial life and prevent us from creating the finances we desire.

Beliefs are the things we are certain about. What about your beliefs about money? What are you certain about when you think about money?

Money runs out
You have to work hard to make money
Money is easy to come by
It takes money to make money
Rich people live on debt
I deserve money

Think about the things you believe about money and ask yourself where these came from. Once you uncover the beliefs you currently hold then you need to decide which beliefs are helping you to reach the financial goals you desire and which beliefs are holding you back.

The power to create your financial future is in your hands. If you are ready to explore your money mindset and create a mindset that empowers you then check out out money mindset workshop.

 

Step 6 – How to get money savvy: Goal setting

The first time I set a financial goal was when I was 32 years old. It was a skill I needed to learn. I needed to formulate a plan to achieve my goals and I can honestly say that goal setting was one of the biggest drivers in changing my financial situation. I still set goals for myself each year because Goal setting gives meaning and direction. Setting financial goals helps us focus on our finances.

Setting – goals marks the beginning of financial planning to help you achieve your goals and objectives at various stages in your life.

What are financial goals?

Financial goals are targets for you to achieve in the future and like our values we all have our own individual goals to achieve. Financial goals are goals that revolve around finances and money.

A financial goal might be getting out of debt or saving for a specific item you can’t afford right now like a wedding. Saving for retirement or buying a new home.

Like all goals this goal needs to be time based. Goals are either short term, medium term, or long-term goals.

Different types of goals:

We have short term, medium term, and long-term goals.
Setting short-term, mid-term and long-term financial goals is an important step toward becoming financially secure. If you aren’t working toward anything specific, you’re likely to spend more than you should.

Make sure your goals are realistic and flexible. If you set your goals too high, you are less likely to achieve them.

Short-Term Financial Goals: (3 months or less)
Short term goals can be easily achieved in a short space of time
E.G. Save R2500 for a new TV

Medium term goal: (4 months to 2 year)
Mid-term goals are priorities that can be accomplished within 4 months to 2 years
E.G) Saving R45 000 for a holiday or paying off debt

Long term goals (More than 2 years to achieve)
Long-term financial goals are priorities that may take more than two years to accomplish. Most long-term goals require regular savings.
E.G) Saving for a kid’s university education or saving for retirement,
Setting short-term financial goals can give you the confidence boost and foundational knowledge you need to achieve larger goals that will take more time. These first steps are relatively easy to achieve. Achieving small victories will drive you to achieve your medium and long-term goals easier.
Annual financial planning gives you an opportunity to formally review your goals, update them (if necessary) and review your progress since last year. If you’ve never set goals before, our Money Savvy programs give you the opportunity to formulate them for the first time so that you can get – or stay – on firm financial footing.

Step 5 – How to get money savvy: Understanding what you value

The first time I ever did a value exercise I was 38 years old. It was an interesting experience because I had no idea what I valued in life or in my financial life. My top value at the time was family. What was scary was I was not living up to my core value in any way, shape, or form.

My family life in fact was a shamble, I was unhappily married and was not spending quality time with my kids, I was always in a bad mood and worked long hours and every Sunday. How could family be my core value when this is how I was showing up for my family every day? Understanding how important that value was to me made me make some big life decisions. I chose to get divorced. We now have 2 happy homes and when I have my kids, I spend quality time with them, and we are all so much happier now.

My values have changed over the years and now a single woman with 3 kids my core value is security, not just security but financial security. Having enough money for everything we need makes me feel safe and I show up each day to deliver on that value. My actions speak for themselves.

Have you ever taken the time to look at what you value? What you and your partner value as a family? Do you even share the same values? I realized my husband and I did not value the same things. We did not value money the same way either.

When you understand your money values you can make decisions around money you will be happy with. If you can understand your money values, which are different for everyone (as we are all individuals), you are then able to align your spending to them. This makes your spending as it happens much more guilt and stress free, as your spending habits and patterns are now in line with your purpose and beliefs. 

Despite what it sounds like, having strong financial values doesn’t necessarily mean being wealthy or even having a lot of financial knowledge — a person with very little money can still be driven by financial values.

We don’t normally think about how money and values are linked together. But your attitudes about money are what defines everything that matters to your personal financial situation: how much money you need, how hard you’re willing to work for it, how you’ll feel when you finally get it and more.

Money is not an end unto itself. It’s merely a tool to help us achieve our goals and live our best lives.

Think about this – how could you possibly put together a financial plan unless you know what it is you really care about?

Knowing your values and what you want to spend on is one of the best things you can do to improve your financial situation. Spend and save for what really matters and lose the temptation to spend on everything else. This focus will help you achieve your goals

At Money Savvy we teach you how to find out what your financial values are and then show you  how to make and manage your money to live up to those values and achieve your goals.

kathryn@moneysavvykids.co.za

Step 4 – How to get money savvy: Set up an emergency saving account

South Africa is a buy-now, pay-later society. The effects on young people’s financial literacy are thus characterized by the same behaviour patterns as parents and society. These are high credit and high consumer behaviour with very little savings, and in turn high social risk behaviour. Money Savvy is working to change this disastrous pattern.

The last year has been really challenging not just for me but for many people across the globe. For the first time in my lifetime we have experienced a global epidemic. We heard and still hear statements like “No work no pay”, “Salary cuts”, “closure of many small businesses”, “This virus is here to stay”.

None of us could have predicted this global epidemic, but we can plan for potential financial threats in our own lives.  If we can recognize what some of those threats could be, we can mitigate the risk from affecting our financial future if we plan correctly. Insurance and savings have protected me and my family from the global threat we are facing. For me like most small businesses in SA when we went into our first hard lock down all my worked came to a grinding halt and all my live workshops were cancelled with immediate effect.

The impact on my finances was dire. I had 3 months where Money Savvy made no money at all. Luckily my advertising agency picked up the slack 4 months later. If I did not have savings in the bank I would have been evicted and probably lost my car. I did have savings and managed to make it through the tough months without too much stress.

I can not stress enough the importance of having an emergency savings account. My suggestion would be that you have 12 months’ worth of living expenses saved up. You never know what life is going to throw at you, but you can plan for the worst and hope for the best.

Here are some tips on starting your emergency saving fund:

  1. Its never too late to start saving
  2. Its never too little. Start with what you have
  3. Set up a saving pocket and automatically transfer money into that account when you get paid monthly.
  4. Pay yourself first before paying bills and paying off debt
  5. Add saving into your budget each month
  6. Try and save a minimum of 10% of your total earnings
  7. Track your spending. Instead of buying coffee on the way to work, make coffee and take that R20 you would spend each day and put it into your savings account. If you did that for a whole year you would have managed to save R5400. Ask yourself….is that coffee worth it?

MSK is revolutionising the way financial knowledge is disseminated to younger generations of South Africans. It infuses our clients with the problem-solving and critical thinking skills they need to make financial decisions now and, in the future, using the analytical skills they learn through the program.

Kathryn@moneysavvykids.co.za

Step 3 – How to get Money Savvy: Multiple income streams

Gone are the days when the mom stays home to take care of the kids while the dad goes to work. I was fortunate when I was younger because my mom stayed at home. She on the other hand was totally unfortunate. When her and my dad divorced at 40, she had to start her life with nothing, never having worked and having no real skills.

Even if I did have a husband who could look after our family, I would insist on making my own money. Not just 1 source but multiple sources of income. Why?

For me my most important value is security so having money for speaks to my values and beliefs. I never want to end up like my mom with not enough money to look after myself.

It’s clear now more than ever that having more than 1 source of income is not a ‘nice to have’ but a necessity. With prices and inflation always on the rise fixed income is no longer the best solution if you have plans on growing your wealth or retiring rich.

Having multiple income streams does not mean you have to have 3 jobs and survive on 3 hours of sleep per night. The smart way to create income is through passive sources. Putting your savings in an interest-bearing bank account will yield interest. The longer the savings stay in the bank the longer you get the benefit of interest and compound interest.

You could start investing and save the money you do make in a tax-free savings account. You can save as much as R36 000 a year for 5 years without paying tax on your savings.

You can rent out a room in your home or turn your outside toilet into a guest suite for rental.

You could look at starting a drop shipping online store. Building the online store, you can do mostly for free with the number of platforms available today. Drop shipping means never having to buy stock but rather selling the stock and then the suppliers post it directly to your customer for you. This whole process can be automated and all you need is a smart marketing plan and budget.

What are some of the ways that you could carve out some extra income for yourself? Have you thought about turning your passion into profit?

Financial literacy is the cornerstone of prosperity and security. It builds confidence and knowledge in the lives of individuals and the country. We cannot address the issues of financial inclusion and equitable and sustainable socio-economic development without addressing financial literacy.

At Money Savvy we have several online and face-to-face programmes to help you make more money and grow your wealth. Ask us how

Kathryn@moneysavvykids.co.za