There’s a ‘wealth’ of financial advice and tips out there. But what are the most basic keys to being financially stable?
What are the core financial questions you really have to ask yourself?
Carla Oberholzer, DebtSafe’s debt adviser and spokesperson, has four fiscal questions that she believes all women should answer:
1. Do you make use of a monthly budget?
It is always very important to know what is going on with those financials of yours. You, therefore, have to make sure that you incorporate a monthly budget (via an app, computer sheet or basic template pinned to the calendar board, for example) in your lifestyle.
If you answered “yes” to the question – great stuff! Continue to track your income versus your expenditures and make sure you get rid of your excessive luxuries to keep your finances in balance.
If you answered “no, not really” – don’t you think it is time to start a basic budget? You can only gain by at least starting with a simple: income minus expenses calculation.
Take a look at this budget outline and start your own one according to YOUR financial reality:
2. Do you currently save money for an emergency fund?
Life tends to throw curve balls from time to time and you will have to deal with unforeseen bills due to a medical emergency or a tyre burst, for example. An emergency fund refers to extra money that’s put aside to create breathing space when you need it most. This type of fund should not be used for holidays, luxuries or other non-urgent expenses.
If you answered “yes” to this (second) question then you are a proactive saver. Well done. Don’t you just feel the relief when something pops up and you don’t have to make debt to cover the unexpected event or situation?
If you answered “no” – look, the economic climate is currently tough. But, you won’t regret starting that emergency fund of yours. Remember: there will be times when you can’t save a lot of money. But, if you can only save R100 this month and R300 the following month, you are at least continually saving and that is all that matters.
Remember: there will be times when you can’t save a lot of money.
3. So, how does your debt situation look currently?
Debt is a part of life and it is not necessarily a BAD thing. But, how you manage your debt or credit obligations can either have a positive or negative effect on your credit score.
If you answered: “it looks under control” – good for you! Continue to keep up with your installments each month.
If you answered: “I am a bit stressed about my debt”. Then perhaps you need to take a hard look at your financial situation. What is limiting you to stick to/’service’ your credit agreements? Remember: you have to either boost your income (like renting out that spare bedroom of yours) or put a lid on your expenses.
Go take a look at your budget and bank statements again and find that unwelcome ‘golden thread’. If you have, however, done this and you find yourself in a worst-case debt scenario – awaiting a possible repossession of a house or vehicle – then go and do your research about Debt Review to find a solution and to make an informed choice.
4. What’s your retirement plan like?
A retirement plan is of utmost importance. It is good to take a hands-on approach when it comes to your future aka retirement savings, plan or annuity. Speak to a broker or your financial planner and do your research well to make informed decisions.
Speak to a broker or your financial planner and do your research well to make informed decisions.
If you answered: “I have indeed started saving for my ‘one day’” – awesome. The money you ‘spend’ now will help you to enjoy a well-deserved retirement later on in your life.
If you answered: “It is a distant reality isn’t it?”. Well yes sure, but it is better to start sooner rather than later. In the blink of an eye your retirement will be on your doorstep and you don’t want to add stress in your life then, now do you? Get into the habit of tucking money away for this type of investment plan or annuity and start asap.
How did you feel when answering these four financial and important questions?
Don’t let these basic questions intimidate you, but be sure to ask yourself these questions to stay on top of your financial situation and to make your finances work for you.
Exclusive article for All4Women by DebtSafe