5 Steps to better financial health

Step 1: Budgeting and spending

The first step to better financial health is to look at what’s coming in and what’s going out. Creating a budget is an essential step to help you with the following:

• Have oversight of your money.
• Organise and prioritise your expenses.
• Keep track of your spending so you can curb it when you need to.  
• Identify where you can/should make changes.

Remember that if you’re overspending (spending more than you earn or spending more than you should instead of saving), it holds you back from reaching your financial goals.

How to make budgeting easier: Use our Budget Manager add-on on our Banking App.

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Step 2: Reduce your borrowing

Borrowing and access to credit aren’t bad if you use it appropriately and if it can put you in a position to improve your financial situation (e.g. a house can create long-term financial security for your family). However, if you’re accessing credit unnecessarily, struggling to repay it and using it to cover daily essential expenses, you’re in trouble.

Short-term debt, such as credit cards and overdrafts, have higher interest rates and become more expensive to pay back. Furthermore, if you continuously find yourself in this situation, it can affect your credit score and affect how expensive it is to borrow that money in the future.

How to borrow less: Stick to your budget and pay off short-term debt.

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Step 3: Start saving

Small steps turn into big leaps, so even if you are only saving a little bit every week/month, it can turn into something larger. The most important part is to start. Having money in reserve will help you afford the fun things in life, create a financial windfall that could absorb the impact of a financial setback or event, and set you up for financial growth in the future.

Savings are not one size fits all; they are based on your goals and your lifestyle. However, you should have the following:

• Liquid savings you can access when you want to do what you want without having to borrow money
• Emergency savings to help you ride out the financial impact of unexpected events
• Savings that you can use towards a long-term goal

How to make savings easier: Automate them and have a separate account that earns you more interest so that you can set it, forget it, and watch it grow.

Step 4: Make better financial decisions

What you do with your money should be based on your goals and your budget so that you don’t make decisions based on emotion and impulse (which you might regret later) but rather on value and how it will help you progress towards your goal.

How to make better financial decisions: Shop around, negotiate and keep track of your spending.

Step 5: Plan for the future

Set yourself up for financial success in the future by doing the following:

• Set financial goals to give your money purpose and direction.
• Create a retirement plan and make contributions to your retirement savings.
• Open a tax-free savings account to benefit from growing your money tax-free.
• Have the right financial and life products (including insurance) to set you up and protect you and your assets financially when life happens.
• Start investing today (even small amounts) to benefit from compound interest and diversify your investments to expand your exposure to possibilities.

How to plan for the future: Speak to a financial planner to help guide your finances, tick off the financial products you should have and help get you on track to achieve your financial goals.

_{This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}