Spring clean your finances with 5 easy steps

South Africans have to go back to basics if they want to maintain good financial health, says Eunice Sibiya, Head of Consumer Education for First National bank (FNB). FNB runs a consumer education programme that targets individuals and organisations and during these interactions disturbing trends are notable. "People think that just because they have been receiving a salary for years, and have been transacting for all this time - controlling money in and money out - they are in control of their finances. This isn't true. One of the first steps we advocate in our education sessions is drawing up a budget. Few people do this, less maintain it, and most are surprised to learn that their expenses are greater than their income," says Sibiya.

Sibiya advocates five simple steps to create a foundation for a successful financial future.

Step One: Draw up a budget.
Your expenses should include fixed expenses that don't change each month, and variable expenses such as electricity and water services. You should also include discretionary costs such as entertainment, take-aways, etc. If you don't know how much you spend each month put all your receipts in a shoe box and write down all expenses you don't receive a receipt for. At the end of the month you will have a better idea of what your monthly expenses really are. This total should be subtracted from your income.

Step Two: Separate wants from needs.
If your expenses are greater than your income, and you are borrowing or surviving on credit, it's time to take action. FNB advocates splitting your expenses into wants and needs. Anything you need - shelter, food, etc - remains. Anything you want - take-aways, fancy shoes - goes. This can be a tough exercise but it helps to show where there are areas you can cut back on.

Step Three: Pay off your debt.
Increase your instalments so that you pay less interest. Don't take things on credit that you should be paying cash for. Never owe more on your credit card than you can afford to pay off each month. Wherever possible, pay off the total amount each month, not just the minimum amount payable. It's too easy to become over-indebted and fall into a debt spiral. If you have too much debt you will spend all your money paying it off and not having any left to buy the things you really need.

Step Four: Set yourself financial goals.
If you just continue to earn money and spend it as you get it, you will never be able to afford the larger (and more expensive) things you want in life. If you want to buy a car, you have to have a plan in place to save up for the deposit. If you need to pay school fees, it's time to cut back on those take-aways and fancy clothes. Start saving now for your dream home or exotic holiday.

Step Five: Make your money work for you.
Don't be complacent about how you use your bank. Make an appointment to speak to a consultant who can make sure you have the best account to suit your transaction needs. You may find that there are cheaper options and better ways of saving. Some banks offer free services. At FNB cellphone banking is free and you can buy prepaid cellphone or Telkom airtime, check your account balances, and transfer money between accounts or to another person at no cost. Using an ATM or swiping your debit card in-store is usually cheaper than going into a bank branch to draw money. Bank consultants should also be able to advise you on the best way to save your money to reach your financial goals.

"These are basic steps we should all be following, no matter how little or how much you earn. Having a successful financial future is like growing a tree. First you plant the seeds of your financial future - you spend money wisely and you save as much money as you can. Then you tend to your tree, making sure it has the right environment to grow in and that you feed it regularly. If you want to pick the fruits of your labour it requires some work. But the rewards are great and worth it," says Sibiya.