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Everybody wants to find financial freedom. Right now, money is top of mind for most working South Africans who have to deal with continued interest rate highs, soaring inflation and sharp increases in the cost of fuel and food that affect our general stress levels.
There is a clear link between our financial wellness and our mental health, Melody Cloete, training specialist at Bidvest Life, says. “When we are comfortable with our finances, we are free to focus on other areas of our lives, like our health, relationships and personal growth. But financial stress drains our happiness and affects our overall well-being.”
Cloete says to find financial freedom, it will help if you answer these questions:
Cloete says this is actually two questions. “Everyone can set a budget and there are numerous resources and apps available online to help you do exactly that. But sticking to it is a different matter and this is where most individuals fall down.
“The secret to managing your money well is paying yourself first. This means saving a percentage of your income each month and then using what is left to pay the bills. That way, you will have money available for life’s curveballs.”
ALSO READ: Proper budgeting can save you from financial ruin – here’s how
She warns that consumers must watch out for small expenses, like takeaway coffees and extra data to rewatch your favourite TikTok videos. There is no need to forego these ‘spoils’ entirely but it is important to be conscious of how you spend and be intentional when choosing to splurge.
“Knowing how much you spend and on what enables you to adjust your budget as you go and rein in unnecessary habits or hidden costs.”
Debt is one of the biggest sources of money stress and poor financial wellbeing, Cloete says. “If you have debt, it costs you more every time the interest rate goes up. Put every extra cent you can towards paying off your debts, starting with the most expensive debts first.”
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If you can, pay more than the minimum balance owing each month, or you will end up paying more interest than you have to, she says.
This is a topic most consumers tend to avoid. But what happens if you die? Will your family and loved ones be able to continue meeting their monthly obligations and live the lifestyle that you want for them?
Cloete says if the answer is ‘no’, it is a problem that can be fixed. Start by taking out life insurance. Be sure to consider a life Income benefit, which instead of paying a lump sum to your beneficiaries (that comes with multiple complexities such as inflation and behavioural risks), pays out as a monthly income.”
ALSO READ: Protecting your income should be a priority in these uncertain times
It is efficient and easy to understand because it mimics the income stream you are trying to replace, she says. Chat to a financial adviser if you are unsure, as they are your best source of expert advice. And remember to draw up a will so that you are in control of how your assets are divided in the event of your death.
Your biggest risk right now is not dying, it is sustaining an injury or illness that keeps you from working and earning an income, Cloete says.
According to Bidvest Life’s 2022 Claims Report, income protection claims accounted for 58% of Bidvest Life’s payouts in 2022, more than for the rest of its portfolio combined.
“This shows the importance of insuring yourself against minor and serious injuries and illnesses that could affect your ability to earn which will, in turn, disrupt or even derail your financial stability.”
Ask yourself: if you cannot work, for how long will you be able to meet your financial obligations? Income protection should be the number one priority for every working South African, she says. It provides security when we need it the most. It pays all your other insurance, medical aid, household expenses and school fees when you cannot earn.
A financial adviser is one of the most valuable allies you can have, Cloete says. “They will walk your financial journey with you and guide you in achieving your financial goals with a sound savings and investment plan.”
Financial advisers help you choose the best options to suit your pocket and your needs on your way to financial freedom. “They make sure you have the right investments to meet your goals and the right insurance to protect you and your loved ones. “I cannot imagine my financial life without my adviser,” Cloete says.
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