Master of Money Management

12-Step Programme for Healthy Finances

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Motivation alone cannot manifest even the most desperate intentions. If you want to achieve a goal, you need an action plan supporting it. If you want to lose weight, you have to stop eating the double bacon burger, if you want to get fit, you have to feel the burn. The same reasoning applies to getting your finances on course, it requires sacrifice, discipline, and a strategy. Here is a 12-step programme to help you achieve your financial goals.

1.  Get organised

Bank statements lie unopened in a folder, policy documents are stored between utility bills and licence renewals, and try as you might you simply cannot locate your car registration papers. The solution is to set aside a day to sort out all of your paper work and file it. De-clutter all your folders, files, or drawers and trash anything that you don’t need. Then that take the file that you have allocated for your monthly bills and make a list of everything you owe. You will then be able to analyse your spending to identify how you can free up some cash to begin that debt elimination plan that has been gathering dust.

2. See the patterns

Once your papers have been ordered and you have identified your spending habits it will be easier to reorganise your budget to pay off some accounts. Choose the lowest debt you have and allocate extra money to it to pay it off as soon as possible, immediately if you can. Keep receipts for all your spending so that you can analyse your spending habits. This exercise will enable you to identify your areas of weakness.

3. Identify triggers

Think about the triggers that get you into financial trouble. If you overspend in malls limit yourself to one visit per month. Even if you don’t save a fortune, whatever you do save will go a long way to covering expenses and halting unnecessary credit card purchases.

4. Optimise your career

Before you can save and invest money, you have to earn it. Take time to assess your career progress. Do you enjoy your job? Are you progressing up the ladder? Do your envisage a long-term future at the company? Is your salary commensurate with your skills? Are you in a comfort zone? Asking yourself these questions will help you to establish whether or not you are doing  all you can to maximise your earning potential. The average person spends 100 000 hours of their lives working; make the most of it. Keep your CV current and list anything that portrays you as an indispensable employee. If you want to be an entrepreneur, or you are already, take a few hours a week to plan and tweak your business plans.

5. Long-term financial plan

Once your debt is under control you can consider a saving strategy. If you are earning a reasonable income, it would serve you well to employ a financial advisor to help you design a financial plan, even if you can’t implement it immediately. A financial plan will give you a long-term view of your finances and help to keep you focussed on your goals.

6. Keep an eye on investments

Even if your investment is long-term, you still need to ensure that they are performing. So often, people put money away and fail to track its performance. Ask your advisor to provide an updated schedule illustrating your investment performance. While you should contact your advisor at least annually to keep informed of your investments, it is also your responsibility to ensure that you are achieving reasonable returns. If you find that they are not performing sufficiently, then find out why, and take action to remedy or change the situation.

7. Risky strategy

No matter how conscientious you think you’ve been with your financial planning, unforeseen circumstances can knock your legs out from under you if you haven’t put a risk strategy into place. Your financial plan should include household, car, medical and income insurance.

8. Looking after ageing parents

Many people approaching retirement age are significantly underfunded. Your parents might look self-sufficient but that situation could change and you must prepare for this happening. Looking after ageing parents is a significant financial undertaking. Discuss your parents’ financial situation and the possibility of them retiring at 65. If they’re fit and healthy they may want to or have to, continue working.

9. Log your achievements

Implementing the above strategies will encourage you to be creative. If you keep a log of your achievements you will be encouraged to keep modifying your strategy and improving your financial wellness.

10. Establish an emergency fund

An emergency fund is one of the best financial planning tools by building up a reserve of 3-6 months’ income, you will have peace of mind and be protected from financial mishaps. Most people have insufficient retirement funds because they keep dipping into them when an emergency arises.

11. Holiday using cash

Don’t splash out on a holiday unless you can fund it with cash. This may seem a little unfair, but redirecting the funds into getting your finances on track will mean that you will be able to pay for future holidays with cash and avoid worrying about paying the bills when you return

12. Aim for financial freedom

If you put these steps in place for an entire year you will achieve a lifetime of financial freedom.


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