Point of view: Tips on how to manage finances

Handling finances can sometimes feel like a daunting task, but it doesn't have to. File photo.

Handling finances can sometimes feel like a daunting task, but it doesn't have to. File photo.

Published Apr 13, 2024


HANDLING finances can sometimes feel like a daunting task, but it doesn't have to. In this publication, I always strive to educate you as a reader on how to manage your money matters.

I came across some of the insights from personal finance experts, on how to handle finances. I thought it would be great to go back to the basics and look at how we can make handling finances less stressful. Here are some of the tips I thought could help you to organise your finances.

How do I create a budget?

Lånea personal finance expert Nina Appelgren said while creating a budget can be an individual task, there are steps that most people should follow to keep track of their money accurately and budget more efficiently.

“Tracking income is the first step to creating a successful budget. This should include your annual salary including bonuses, any income from side hustles or freelance work, and any benefits that you may receive.

“You should then compile a list of all your potential monthly expenses. This will include rent or mortgage repayments, groceries, utilities, and other bills such as phone and wi-fi bills, subscription services, leisure and transportation expenses.

“From this, assign a specific amount of your salary to each expense. Prioritise the essentials, and don’t forget to factor in savings. Ideally, you can save a portion of your annual salary – around 10-20% is a good amount to aim for,” she said.

University of Canberra assistant professor in finance and financial planning Bomikazi Zeka said using tools such as spreadsheets and budgeting apps can help you track your money.

“If you are living within your means, your budget should indicate a surplus – more cash inflows than cash outflows. So budgeting provides an accurate account of your short-term financial position.”

What are the best ways to save money?

Appelgren said many of us want to save more money than we already do, but it can be hard to determine what can go and what can stay.

“The first thing to do is look at your budget and see what expenses you can do without. This may be something as simple as cancelling unused streaming services or other regular subscriptions that you no longer need.

“Another way to incentivise your savings is by setting saving goals. This could be planning to put money into an emergency fund, holiday fund, wedding fund, big purchase fund, or whatever you’re saving for. This will help with motivation as you’ll see that saving pot grow and feel closer to what you’re working towards,” Appelgren said.

How do I choose a bank?

Sajeel Jagjivan, FNB head of Pricing, said since every individual is unique, it’s essential that we each choose a bank account based on our personal needs, not just because it appears cheaply priced.

Appelgren reiterated Jagjivan’s view and said you should consider your personal banking needs when deciding on a bank.

“This could be whether you want to go with a traditional or entirely digital banking service, proximity to a nearby branch, or any specific features that you may require. Make sure you research what different banks have to offer, as some banks may have special benefits to opening an account with them,” she said.

What are ways to improve credit scores?

Lerato Thwane, head of E-Commerce at Tesserai, said improving your credit score is a gradual process that involves responsible financial habits and careful management of your credit.

"Your credit score is a reflection of your creditworthiness, determined by factors such as your payment history, credit utilisation ratio, length of credit history, and mix of credit accounts. It serves as a predictor of your future financial behaviour and is a decision-making tool for lenders, landlords, and potential employers. Additionally, it allows you to make informed decisions regarding your financial future," she said.

Appelgren said: “To improve your credit score, it’s important that you are paying your bills on time, as a consistent payment history will keep it high. Similarly, reduce any debt where you can and pay it off as soon as possible.

“Additionally, be sure to use your credit cards responsibly. Avoid maxing out, and don’t take on more debt than you can handle. Regularly check your credit report to ensure the information is accurate.”

Should I invest my money instead of saving?

According to Appelgren, investing creates the potential to increase your money over time and receive higher rewards long-term. However, it does not come without risk, as the value of investments tends to fluctuate, so you should make sure that you’re comfortable with this before proceeding.

“Choosing whether to invest or not is a personal decision, and it isn’t right for everyone. If you decide that you want to, always make sure you have an emergency fund before doing so – this should ideally be three to six months’ worth of your salary. This will provide a safety net in case of unexpected expenses e.g. repairs, medical bills, etc,” she said.

* Maleke is the Personal Finance content editor.