Most of us would like to take control of our money-matters but lack the know-how and are perhaps uncertain about where to begin. That's why FNB have partnered with financial guru Suze Orman to bring you hints and tips on creating true wealth - an effort to define ourselves by who and what we are, rather than by what we do or do not have.
Credit cards are an essential tool in today's wallet. They are the most efficient transaction mechanism you could have - safe, accepted and international. But, as Orman points out, that doesn't mean they need to be used as a means to accumulate debt. All of the transaction benefits of a credit card are yours if you keep a positive balance on your card. As highlighted in her latest guidebook designed especially for our South African market, the best way to start getting in touch with your money is to determine how much you spend and what you spend it on. To start on your journey towards achieving true wealth, do this simple exercise that serves to put things into perspective. Begin today by putting a few hours aside for this task. Collect all your bank and credit card statements, invoices, bills and the like. If you do not keep these items, this is your incentive to start. Calculate your spending over a 12-month period and then break it down by month. Group all related expenditure together and work out a monthly average by category. This will reveal your actual spending. This is a way to start being honest about your income and expenditure and prevents the self-deception that leads to financial chaos. It will also help you get an idea of your credit card habits - whether you carry over debts month-to-month whilst holding positive balances in other accounts that may be earning less interest. You may find that you could manage your finances to avoid excessive debt completely. Completion of this task demonstrates your commitment to financial freedom. Turn your money dreams into reality by taking this crucial step. Flight into financial security, says Orman, requires grace and self-effort. The degree to which you apply yourself is up to you, but the point is that only you can create it. Moving beyond one's fears about money, changing one's behaviour and acting honestly and immediately guarantees unexpected success.
Orman combines motivation, life-skills and personal finance education into a package that people everywhere can relate to. Perhaps it is this "people first, money second" approach that has added to her popularity and made people consider their financial standing from a different perspective. Orman defines the concept of true wealth as the fundamental factor in achieving real financial freedom.
True wealth can never diminish. Recognising and embracing this will allow you to pursue it. Combined with this notion of self, are a few practical steps towards creating a healthy attitude to one's finances.
Being respectful of money - this means respecting yourself in relation to your money. Orman firmly believes that it is this that attracts wealth. Examine your actions with regard to money closely by using the methods above to reveal your true attitude. A respectful attitude towards money requires consideration, planning and positive action. Some positive ways to show respect include paying bills in a timely way, not wasting money or being extravagant for no reason, keeping your purse or wallet neat and orderly, facing debt and settling it appropriately. This includes managing the balances across your accounts. For example, keeping a positive credit card balance can give you the best return for your cash, while affording you all of the convenience of a credit card.
Investing in yourself - this relates directly to cultivating a healthy attitude to saving. This means mentally switching gears and allowing yourself to "pay yourself" by maximising your savings and being judicious about managing your monthly spend. One way to achieve this is to use your credit card as a savings tool rather than just a spending tool. There is also the concept of good debt that will empower and improve your position, such as a student loan. Applying money to such a pursuit is really investing in your self.
Closely related to the above is trusting yourself. You make hundreds of decisions - large and small - each day, which have consequences. Orman promotes being responsible for our financial decisions, owning them and listening to the instincts that will guide us with regard to our money. It is invaluable to seek outside advice from institutions, but it should always be applied in conjunction with one's own "inner voice" about action that is appropriate to you and your lifestyle. You are the person who cares most about what happens to your money. You owe it to yourself to be educated so that you make the most informed decisions possible.
Good financial habits are entrenched at an early age and will influence your future financial behaviour. It is vital to teach your children to be responsible with their money and allow them to take charge of and manage it, no matter how nominal the amount. To discover how your money memories as a child affect your present fears about your finances, do this simple task. Think about your past and pick an instant related to money. Write about it without censoring yourself and once you're done, consider how this has impacted the way you handle money presently. List how your money memories are connected to your greatest fears about money and make the connection. The next step is embracing these fears and creating new truths for your self. A new truth is an affirmative slogan about the ideal situation you would wish to find yourself in with regard to your finances. State your intentions positively, keep your statements short, make them unlimited and keep them in the present tense. Because words are powerful, they can create belief and belief can help manifest the truth.
Prosperity supports actions of generosity - being charitable displays an appreciative spirit and is liberating and rewarding. Being "cheap" has less to do with how much you have and more to do with attitude. Letting one's money stagnate, because you are unwilling to allow some of it to flow out denies one the serenity to be gained when generosity and responsibility go hand in hand. Think about what sort of contribution would bring you joy and commit yourself to following through on these gifts. Releasing your grip on money is generous and generosity makes one feel powerful. It is this positive powerfulness that will attract money to you.
It is important to be responsible with regards to money - this means thinking about investments that will protect yourself and your loved ones in the event of death, disability or retrenchment. These include annuities, life insurance, wills and the like that may lift the financial burden in uncertain times. In order to determine whether you are putting people first, honestly answer the following checklist:
have a will that is accurate and up-to-date?
have a revocable living trust with an incapacity clause?
have durable power-of-attorney over health care?
have proper life insurance?
have proper disability insurance?
If you do not have any of these documents in place, ask yourself why not and then act to remedy the situation.
Orman's approach to financial management places the power and responsibility into the individual's hands. Awareness, planning and action put the wheels in motion with a focus on the satisfaction to be gained from taking control of one's money and making it work for you now and in the future. With the right actions our finances can see us through our lives and bless the lives of our families and loved ones.
"True financial harmony is achieved when your pleasure in saving money equals or exceeds your pleasure in spending it."