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The Essential Guide for Money Management see money differently NEDBANK

CONTENTS 1. Healthy money habits & budgeting 2. Responsible borrowing 3. Investing for growth 4. Insurance to protect your life, assets and the ability to earn an income 5. Planning for retirement 6. Leaving a legacy

01. Healthy money habits & budgeting

a) UNDERSTANDING YOUR SPENDING HABITS A good starting point for any money management plan is to understand your current expenses and spending habits. Whether you are in the fortunate position to have money left over at the end of the month, or are managing your money tightly to make ends meet, analysing and keeping track of what you spend your money on will form an important pillar of your financial well being into the future. Analysing your spend will help you: 1. Make more conscious spending decisions. 2. Quantify how much you could / should be saving each month. 3. Set a realistic budget and stick to it. Living within your means The principle of “living within your means” simply suggests you should keep your expenses below your income. It is perhaps stating the obvious, however, many people end up spending more than they can afford - whether as a result of poor planning, excessive spending habits or both. If you are consistently living above your means, you will soon find yourself stuck in a debt cycle that can be difficult to escape. 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.

Expense tracking Understanding your current expenses simply requires logging all your spend for a couple of months and allocating each purchase / expenditure to a logical category. It’s important that you account for everything as often it is the little amounts that we are unaware of that can add up quickly. 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. 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. 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. 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.