Top 10 financial mistakes

By Staff Writer
By Ashleigh Brown, journalist, Justmoney 
Keeping track of your personal finances can be difficult, and sometimes the smallest mistakes can cost you in the long run. Here we look at the top 10 financial mistakes and offer some tips on how to avoid them. 
1. Not saving every month 
Many South Africans do not save, which leads to a host of financial problems. Learning how to save, and getting in the habit of it will help you to be more financially savvy, as well as have extra money in case anything unexpected happens. 
Justmoney has eight tips on how to save more (click here), and how to save R10 000 in ten months (click here). 
2. Not have a ‘rainy-day’ account
Sometimes life throws us curve balls, and they can cost a pretty penny. Setting aside money for emergencies will not only give you peace of mind, but will be a good cushion in case of unexpected events. 
By starting to set aside a small amount of money every month, and making it part of your budget, you know that when something unexpected does happen, that you will be covered.  
3. Not realising the little things add up 
Getting that coffee in the morning on the way to work, or buying a snack on the way home might seem like a little bit of money at the time, but it can all add. 
If you, for example, you pay R25 on coffee five days a week, for a month, then you would have spent R500 extra that month. By the end of the year, that would add up to R6, 000. That is quite a lot of money spent on something you could have made at home or the office. 
“It is also important to note what you are spending on groceries and food for the family. Budgeting as a family will help you realise your financial goals easier since there’ll be a collective effort from all the family members,” suggests Eunice Sibiya, head of consumer education at FNB. 
4. Not planning for the future
Planning for the future is something everyone should be doing. Future planning also includes things like making sure you can afford all your financial product repayments, your child’s education, or just being able to be debt free.
Deon Nel, head of financial consulting for Standard Bank says: “Every element of a good financial plan should be discussed; this includes everything from short, medium and long term savings, life cover, health cover, income protection, short term risk insurance and disability insurance. It may seem like a tall order but covering all the bases is a vital part of becoming wealthy.”
5. Not understanding ATM fees
Maybe you’ve decided to go shopping, and have parked your car in a parking bay, but have forgotten that you need to pay cash. You withdraw money from the ATM but what you don’t realise is the cost involved in drawing money from that machine. 
These costs, at the end of the day, all add up. Make sure you know the costs of not only ATM fees with your own bank, but also transaction fees, banking fees and any other services you use at the bank. 
6. Signing up for rental or mortgages that you can’t afford 
That house was just the perfect dream home for you, but the rent was a bit more than you anticipated. Nevertheless, you signed the lease agreement. A few months down the line, you find that you are falling behind, and your dream has become a nightmare. 
This lends to the next point (not having a budget). Make sure you know exactly how much you can afford for rent, or a mortgage, and then shop the property market accordingly. 
7. Not having a budget
If you don’t have a budget it is difficult to know exactly how much money you can spend on food, going out, shopping and anything else you might want to buy. That is why having a budget is so important, even if it is just a simple one. 
By making a list of how much you have left after fixed expenses, you can allocate how much money you want to save, and how much should go to groceries, entertainment, and anything else. 
“The trick is once you start making money you need to learn how to retain it and then invest the money so it starts working for you. Yoyu should take advantage of professional help at this stage, such as a financial planner, to help you fine tune your plan,” advises Nel. 
8. Forgetting about automatic deductions
You linked your gym to your bank account figuring you’d never have to worry about having to pay a bill. That is, until you spent all your money on a boozy Saturday night out. If the bank goes to get the monthly amount and finds nothing there, you’ll be hit with a giant insufficient-funds fee.
You can easily track this by setting up email reminders or calendar alerts, so you’ll know when you need to keep a little extra in your account.
9. Misunderstanding credit and credit cards
Just because the bank is willing to give you R10,000 in cash to lend, doesn’t mean you need to spend all of it at once. Whether it’s cash advances, large balances, only making minimum payments, paying late or not paying at all, the credit can be more trouble than you realised. You can also get into trouble buy taking out too many loans,, unnecessarily increasing your limit and wrecking your credit rating by being a bad payer.
10. Not planning your estate
As you build wealth your estate may include property, cash, investments, personal property, and other assets and they could add up to a lot more than you thought you were worth. It is important that you take care of the wealth that you have created for you and your family. 
Nel advises putting a will in place will not only protect your assets but will ensure that your family is taken care of and that your wealth is distributed accordingly. If you don’t  have a will your assets will devolve in terms of the Laws of Intestate Succession.
When it comes to your finances, make a plan so that you know exactly where you stand. “Take the time to consider all of these factors and craft a game plan for yourself. By doing this you will get a helicopter view of your financial life and have the ability to put in place the actions that will help you achieve your financial goals,” says Nel. 

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