Rands & Sense

Sisandile Cikido

SHOULD YOU SPLURGE? OR SECURE YOUR FINANCIAL FUTURE?

SOME would say that saving and proactively investing was an easier discipline to manage in years gone by. Enter 2021, where social media and the pressure to “keep up with the Joneses” – or would that be the Kardashians – have turned us into a nation drowning in more debt than we realise.

Most South Africans have reached a crossroad in their financial journeys, which is why it has become crucial for consumers to take an honest look at how they manage their money and be more conscious of the choices they make.

While there is nothing inherently wrong with consumption – it is a key driver of economic growth – rampant consumerism at a large scale is unsustainable. The good news, however, is that it is possible to change this scenario and transform our reality from one of bills and financial stress to a healthy relationship with our money – and a more sustainable financial future.

Here are four easy and effective tips on how to make better money choices:

1. Small changes can make a big difference Yes, it is hard to save in these tough times. But consider just how much that R30 visit to the coffee shop every morning is affecting your overall financial outlook. Add up all those days and you’ll see that it’s actually costing you just under R1 000 a month. This is money you could be spending on getting yourself out of debt or investing into a better future for you and your family.

2. Carefully consider that splurge Loving those sneakers you saw on the gram? What if you signed up for that short course instead? Also, instead of bagging those same sneakers, you could even invest in the pursuit of a longstanding personal dream that is outside of your current career path, but truly makes you happy. The point is, next time you want to splurge on a social media fad you don’t really even need, compare the price of the item to an intangible investment, such as education or an additional contribution to your investment account, and choose the wiser option – you will thank yourself later down life’s path for making that decision, it’s like a love letter to you from you.

3. Life is so much better when it’s lived without regrets Think back to the December holiday you spent house-bound while your friends on social media made you green with envy from all their vacation posts. Now, think back to all those weekend nights you spent partying the night away that same year with … those same friends. It’s not about completely doing without, but rather cutting back a bit to pay for the holiday you were dreaming of going on.

4. Use the right tools Even with the best intentions and sacrifices, your money management journey won’t take you as far as you dreamed without the correct investment vehicle. Elements to consider when putting your money away include costs such as management fees, administration fees and capital gains tax. Choose an investment product that offers competitive returns and make sure that the product you choose works for you. Putting your extra cash to work in a bank fixed deposit, for example, could earn you significant interest over an investment term of up to 60 months, from as little as R1 000.

Sisandile Cikido is head of retail investments at Nedbank