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NEDBANK PROFESSIONAL BANKING THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT see money differently NEDBANK

TABLE OF CONTENTS 01 Healthy Money Habits and Budgeting A. Understanding your spending habits 03 B. Setting a budget you can stick to 05 C. Saving intentionally 07 D. Building a healthy credit score 09 02 Resposible Borrowing A. What is debt and why is it important 10 B. Loan types and how to use them 12 C. Getting out of (debt) trouble 13 D. Frequently Asked Questions 15 2 THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT

03 Investing for Growth A. Basic investment principles – introduction 17 B. Thinking about your investment needs 19 C. Understanding Investment Options 21 D. Financial advice and who to turn too? 23 E. Glossary of commonly used investment terms 25 04 Insurance to Protect Your Life, Assets and the Ability to Earn an Income 05 Planning for Retirement 06 Leaving a Legacy If you are consistently living above your means, THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT 3 you will soon find yourself stuck in a debt cycle that can be difficult to escape.

Keep your expenses below your income. If you are consistently living above your means, you will soon find yourself stuck in a debt cycle that can be difficult to escape.

01. Healthy Money Habits and Budgeting A. UNDERSTANDING YOUR SPENDING HABITS Research shows that people who manage their spending patterns and plan carefully for big purchases like a home are much less likely to have financial trouble later. A good starting point for any money manage- LIVING WITHIN YOUR MEANS ment plan is to understand your current expenses and spending habits. The principle of “living within your means” simply suggests you should keep your expenses below Whether you are in the fortunate position to your income. have money left over at the end of the month, or are managing your money tightly to make ends It is perhaps stating the obvious, however, many meet, analysing and keeping track of what you people end up spending more than they can spend your money on will form an important afford - whether as a result of poor planning, pillar of your financial well being into the future. excessive spending habits or both. Analysing your spend will help you: If you are consistently living above your means, you will soon find yourself stuck in a debt cycle 1. Make more conscious spending decisions. that can be difficult to escape. 2. Quantify how much you could / should be THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT 5 saving each month. 3. Set a realistic budget and stick to it.

EXPENSE TRACKING There are many tools out in the market to help you to track your expenses. You should choose the method that works best for you. Understanding your current expenses It’s important that you account simply requires logging all your spend for everything as often it is the little for a couple of months and allocating amounts that we are unaware of each purchase / expenditure to a that can add up quickly. logical category. 6 THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT

It’s important that you account for everything Manual tracking of till slips & invoices This may be old style, but certainly works! Simply collect all receipts (nothing wrong with the good old shoe box) and sit down at the end of the month to capture them into a spreadsheet or journal means, you will soon find yourself stuck in a debt cycle that can be difficult to escape. Money tracking & budgeting apps There are many standalone apps available – many of them for free – that allow you to capture your expenses digitally on your phone as you go. Means less work for you at the end of the month, and you can see immediately where are you are with your spending. THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT 7

Integrated money tracking solutions Some banks offer more integrated solutions, where expense tracking is offered as part of online banking. The advantage is that all electronic transactions can automatically be populated from your bank account/s. Full accounting packages A bit more sophisticated, full blown accounting packages can work for your individual finances – especially if these are a bit more complicated. Nedbank’s MoneyTracker This is a fully integrated money tracking solution for Nedbank Online Banking and Money app users. It works ideally for people who are fully banked with Nedbank and where the majority of transactions are done on a Nedbank credit card or bank account. 8 THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT

Manual tracking of till slips & invoices. This may be old style, but certainly works! CATEGORISING YOUR EXPENSES There are many tools out in the market to help you to track your expenses. You should choose the method that works best for you. Now that you have chosen a Its important that you come up method, start by selecting the with a list that makes sense for categories that are relevant you. You can always add more to you. categories as you go along – the more detailed your budget, There is a common set of cate- the easier to understand your gories that would apply to most spending pattern. households, but then there are things that are specific to you and your circumstances. THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT 9

Unpack your expenses over a three month period and calculate an average 10 THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT

TYPICAL SPEND CATEGORIES Home Transport Personal Entertainment Housing (rental, bond) Car finance Subscriptions (DSTV, apps) Lights, water, rates, levies Car Insurance Sports / hobbies Restaurants & entertainment Home Insurance Petrol Books/ebook Once-Offs Wifi Tracking Repair & Maintenance Holidays Wages (domestic, gardener My Essentials Gifts Luxuries Security Medical Aid Adhoc/Other Pets Groceries Education Personal/My family School Fees Clothing Uniform Pocket money THE ESSENTIAL GUIDE FOR MONEY MANAGEMENT 11