Whether you have landed your first job or have secured a job after a long dry season of job hunting, it is crucial to set up a financial safety net. But where do you start? Having the basics down can help you prepare for the future and protect your finances from life's unpredictable moments. Here is what you need to know.
Pay off debt
It's crucial to minimize whatever debt you may have accumulated, even if it is a small amount. Improving your money relationship can help you be better prepared for unforeseen events or an emergency that can take a huge chunk out of your budget if you have not planned for it.
Don’t let fear rule your relationship with money
Being without a job can cause stress. More so, if a person hasn't been employed for a while. However, operating from a place of fear with your finances once you have landed a job can cause some people to create unrealistic goals.
For example, saving money and having an emergency account that can cover at least 3-6 months of you not receiving an income is a wise move.
However, saving as much money as possible to the point where you are unable to cover basic things such as entertainment, buying new clothes when you need to or replacing items can cause you to blow whatever budget you have set.
Have insurance to protect you
Things such as life insurance, funeral, and disability insurance are a financial safety net that we all need. Life is unpredictable, and it can be more painful for you and your loved ones if there have been no financial safety nets to help protect you from these unpredictable moments. Make sure to always evaluate your options to find something that will be affordable and sustainable for you. You can use our life insurance calculator to see how much life insurance you will need.
Plan purchases in advance
Managing your finances is a balancing act that needs to be adapted over time. However, planning any of your purchases through use of a budget and savings plan can help you avoid spending money that you don't have. Remember, never spend money that you don't have in your bank account to avoid debt.
Start an emergency fund
Putting aside a manageable amount of money that you will commit to each month is crucial. Speaking to a financial advisor can help you set a realistic financial goal that you will maintain. Those hundreds of Rands that you put aside can come in handy when an unexpected cost pops up.
Track your finances
Frequently review your budget and your daily spending habits to see if you are still on track. Never forget to check your bank statements each month or every 2-3 months to see if there are things that need to be adjusted or cut back on.
Set financial goals
Having a target can instil discipline when it comes to your finances. Therefore, having financial goals can help you better plan your finances and also find the right ways to grow your money. Remember to do your research. If it sounds too good to be true, it probably is.