Just trying to keep your head above water and taking it day-by-day might seem like the best way to manage your personal finances during 2021. Not planning or making financial commitments might seem like a safe option as the ‘corona coaster’ has taken many on an unpredictable financial ride last year.
However, it is possible to plan and take control of your finances. Nomtha Lusu (Head of Corporate Marketing and Communication at Iemas Financial Services) and Piet Wolmarans (Managing Director at Iemas Insurance Brokers) suggest few simple ways to help you manage your finances responsibly.
Let us start at the beginning – what is financial wellness?
Nomtha: Financial wellness has little to do with being wealthy and has everything to do with living within your means. For example, not spending what you cannot afford and making sure that your debt is manageable so that you can pay back what you owe your creditors. In addition, financial wellness is about planning and adapting your finances to your current or future situation.
Why is it so important to achieve financial wellness?
Piet: Living financially well is very similar to living physically well. If you eat healthy food, exercise regularly, get enough sleep and drink lots of water on an ongoing basis then you will have a healthy body. The same applies to your personal finances. If you budget, pay your debt on time, ensure your assets and save regularly then your finances will become ‘healthy’ too. It is so important to achieve financial wellness because if you are in control of your finances and know how to manage your money then you will be able to adapt financially when the unexpected happens.
How can the average South African achieve financial wellness?
Nomtha: It might seem like a big and distant goal, but you just need to start somewhere. Be honest with yourself; do not avoid looking at your bank accounts and credit statements rather go through each statement. Make sure you know exactly what your financial situation is – that is knowing how much you earn and how much you spend. You also need to face your debt. Make sure that you have a 360-view of all your loan accounts and where you are struggling to pay off your debt, you need to contact your financial services provider to make payment arrangements. The best way to achieve financial wellness is to draw up a budget, stick to it and at the end of the month, see how much you have spent and how much money you have left. Times are tough right now, but it is important to still save on an ongoing basis – as we have seen you never know when you are going to need extra cash
How can individuals maintain their financial wellness, especially when their circumstances change?
Piet: If you have lost your job or if your salary was reduced, then you should go back to the drawing board. Not having an income at all or getting a pay cut means that you might have to dip into your savings, consult your financial services provider about restructuring your debt or sell your unnecessary assets. It is important to keep calm and get your whole family on board to make lifestyle changes such as moving to a smaller house, not dining out or going on holiday etc. However, be careful when reducing your living cost as canceling your medical aid and insurance policies (this includes funeral and life cover), especially during uncertain times might cost you so much more in the long run.
How does Iemas assist individuals with achieving financial wellness?
Nomtha: As a financial services co-operative, we believe in giving back to the communities in which we work in and to add value in the lives of those around us. As the saying goes ‘give a man a fish and you will feed him for a day, but show him how to fish and you will feed him for the rest of his life’. As such, we offer financial wellness training at no cost to our partner employers across South Africa, providing financial discipline, tricks and lessons learned, and tools to assist people with managing their finances responsibly no matter what life brings.