Good, consistent money management creates financial freedom and as a mom, you get to set the example for your children and instil lifelong saving habits.
Most of us want to have or earn more money. We believe that more money will be the answer to an easier, happier and stress-free life. Surprisingly, this is not the case. Although more money may be helpful in the short term, if we don’t manage our finances well, in the long term having more of it won’t address the underlying issues.
Nicky Edwards, Reskill Programme Lead at Taking Care of Business (TCB) – an organisation that has been training people on how to manage their money successfully for over a decade – says: “Most of the unconscious beliefs and emotions we develop around money – the way we think, feel and behave around money – are set up during childhood. That is why it is so important that moms create good money habits. Your emotions around money and how you deal with it affect your children’s future spending – and saving.”
Read our article on helping children understand the value of money.
Five practical money tips
Edwards shares five practical things you can do to start your journey to financial freedom and ensure your kids learn from your good example.
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Don’t bury your head in the sand
“Financial problems and growing debt can be overwhelming and make you feel sick and stressed. Running away from your money problems or trying to ignore them only makes things worse. Burying your head in the sand will not make your problems go away. Bad financial habits will negatively impact your future and your children’s futures if you don’t face them head-on,” Edwards says.
The first step to becoming financially free is facing the truth. It is only when we face up to our current money situation that we can start dealing with it. “Always remember that you are not alone when it comes to money challenges and stresses,” she comments. “You’ll be surprised by how many people appear wealthy but have mountains of debt and a lot of stress because of it.”
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Find out what you’re spending your money on
To understand exactly where your money is going, commit to writing down every cent you spend for three months, advises Edwards. “It doesn’t matter how small the amount is – write it down. We often believe we don’t spend much on small luxuries, like takeaway coffees, fizzy drinks, sweets and impulsive (or unplanned) buying. By writing down everything you spend, you will likely be surprised by how much of your money goes towards these unnecessary expenses,” she says.
“Keep a small booklet and a pen in your handbag so you can jot down everything you buy as you go about your day. If you record all your expenses over three months, you will have a very good idea of what you spend your money on – this is the first step towards drawing up an accurate budget,” she explains.
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Make a monthly budget and stick to it
“Now that you know what you spend your money on, you need to draw up a budget with all your monthly expenses,” says Edwards. “Without a monthly budget, we have no control over our spending.
“Understanding what we do with our money is the beginning of seeing our financial truth. When you draw up your budget, start by deciding what you need to spend money on, things like housing, groceries, utilities, transport – rather than what you like to buy,” says Edwards. “Make a list of all your monthly expenditure needs, and don’t forget to add your debt repayments to this list.”
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Add your annual, unexpected and saving costs to your budget
“Once you’ve written down all your monthly expenses, add your yearly expenses. These are costs you only pay once or twice a year. Yearly expenses could be school fees, school uniforms, car licence and birthday expenses,” explains Edwards.
“Then add a list of unexpected expenses; things that could happen during the year, like replacing a cell phone or paying a traffic fine. Once you have your annual and unexpected costs written down, add these costs up and divide them by 12 so you know how much to budget for them each month.
“Your short-term savings are these unexpected and annual amounts you have added to your monthly expenses. However, you should also have medium- and long-term savings. Aim to have three to six months’ worth of expenditure as savings. Work out how much you need to save to have this amount and divide it by 12 to find out how much to put towards savings monthly. You can save through a stokvel or a fixed deposit bank account,” advises Edwards.
Add your annual, unexpected and savings amounts to your monthly budget. Work your total budget so that it is structured something like 50% needs (food, housing, water and electricity), 20% wants (entertainment, eating out) and 30% savings (retirement, emergency fund, funerals/weddings).
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Learn to say “no”
It may seem overwhelming to have to stick to the strict budget you have set up, but it can be done. Firstly, set boundaries with friends and family who may want you to lend them money or buy things for them. “Learn to say no. You must think of yourself and your children and take responsibility for your immediate family’s future first,” Edwards says.
“Also learn to say ‘no’ to yourself. Don’t buy things to impress your friends. Stop caring about what others think of you and start making good choices for yourself and your family. And, don’t spend money on unnecessary things that make you feel better, this is emotional spending.”
There is no quick fix
“Finally, you will need to persevere, there are no quick fixes. Learn to be patient and save for the things you want. Financial freedom takes time and commitment. If you stick to your budget and plans, you will see that you can save,” Edwards says. “You need to think about and plan for your future. It is never too early to start saving for your future.”
Courses
Me and My Money Courses are run from TCB branches in Cape Town, Paarl, Durban, Midrand and East London.
