Did you know more than 85% of South Africans live with more debt than they can realistically pay back? Very few South Africans actually save money, and most live from one payday to another with no plan for when things go wrong.
We’re here to help you take actionable steps to become more money smart and take control of your financial future.
1. What does it mean to be Money Smart?
Being money smart means understanding how to manage your finances effectively. Financial literacy is about knowing how to budget, save, manage debt, and make informed decisions about spending and investing.
When you are money smart, you can avoid unnecessary debt, build savings, and achieve financial stability, which in turn helps to eradicate poverty within your family and create stronger communities.
2. Start with a Budget
Creating and sticking to a budget is the first step toward financial well-being. Here’s a quick guide to get you started:
- Identify the difference between a need and a want. A need includes items you cannot live without such as rent, food, electricity and school fee payments. A need are items you would like to have but can live without such as take-aways, a new pair a shoes, extra treats for your child or beauty treatments.
- Make a list of all your expenses. Break these into three categories:
- annual expenses (such as a car service or TV licenses),
- once-off expenses (such as school uniforms, gifts)
- unexpected expenses (such as replacing a broken appliance or a medical bill).
- Plot all of these on a 12 month plan. See what your total expenses are for the year, not just the month, since some month may have more expenses than others.
- Record your monthly income, expenses, and debt repayments. Are you able to cover all your expenses? Are you saving enough for the annual and the once off and the unexpected expenses?
- Review your budget and make any changes that are needed.
Track your spending for a month as a starting point.
Our gift to you!
Download our simple Me and My Money budget sheet template to help you to start your budgeting journey.
3. The Importance of Saving
Saving is crucial for managing life’s uncertainties and achieving both short-term and long-term goals. Here’s why we save:
- For unexpected events: Life is unpredictable, and unexpected expenses can occur at any time. Having savings helps you avoid getting into debt when these events arise.
- For short-term goals: Save for things like birthdays, school expenses, holidays, and household goods.
- For medium-term goals: Save for buying a car, a home, or your children’s education.
- For long-term goals: Save for retirement to ensure financial security later in life.
How to Begin Your Savings Journey:
- Start building up an emergency fund. You could put money into a savings tin, just to get started! If you are saving in a bank account make sure you are earning interest, so that your money keeps growing.
- Start paying off your debt each month, especially your high-interest debt like credit cards or personal loans.
- Track your expenses daily—you’ll be amazed at how much money you waste.
- Cut down your spending. Only spend on “needs” and not on “wants”.
- Set financial goals. Set a goal such as paying off an account or saving for something you need.
- Save each month by setting up a debit order.
- Decide how you want to invest your money.
- Decide whether you need insurance.
- Make sure you have a will in place.
Consider opening a separate savings account for emergencies.
4. Managing Debt Wisely
Avoiding bad debt is essential for financial well-being. Use credit responsibly by understanding the real cost of borrowing money. Remember, nothing is for free, especially credit! Let’s explore what credit actually costs us.
Interest is what credit providers charge when they lend us money. Registered credit providers have certain maximum interest rates they can charge for different types of loans. However, unregistered credit providers can charge whatever interest they want.
Below is an example: Let’s say you borrow R1,000 over either 3, 12, 24, and 36 months at a maximum interest rate of 60% per annum on a short-term loan.
What have we learnt?
- If you have to borrow money, work out the total amount you will repay before deciding to borrow.
- The longer the repayment period, the more interest you will pay.
- Just because the repayments (instalments) are small, it doesn’t mean you are paying less in the long run.
- If you must borrow money, pay it back as soon as possible, even if the repayments are high.
Always aim to pay off your credit balance in full each month to avoid high-interest charges.
Your journey to financial freedom starts today
Becoming money smart doesn’t have to be complicated. Start by creating a budget, prioritising saving, and managing debt wisely. Small changes can lead to big improvements in your financial health.
We understand how poor money management can affect both self-employed and salaried individuals. Our Me and My Money training focuses on developing essential money skills to help you or your staff get out of debt, start saving, and regain control of your finances. We’ve trained thousands of people to take control of their money – now it’s your turn.
Learn more about how to get our Me and My Money Training here.
A Me and My Money Success Story
In July 2024, we had the privilege of training the Living Hope group, a Faith-based Non-Profit Organisation based in East London, in our Me and My Money course.
“Thank you very much for empowering us with such great information. My colleagues were amazed when I told them that I have to write down all the money I used every day. Now I am going to stop to put my money in Stokvel because there is no interest. The training was an eye opener that the way we were raised in our homes do affect they way we do things. Budgeting is the best way. Also knowing the needs and the wants. I was empowered with more skills on how to handle my money.”
Phumla, Living Hope
TCB – Taking Care of Business us a non-profit social enterprise. We are empowering unemployed South Africans and their families to escape the cycle of poverty through small business opportunities, mostly within the circular economy.