The common notion that money makes the world go around, stands true for many. Money is viewed as a tool that enables our dreams of a better life, helps validate our success and amplifies how successful we really are.
Our relationship with money is emotional and derived by our needs, wants and ultimately the fear of missing out (FOMO). "Lack of effective money management skills can put a strain on your pockets and even hamper family relationships. Ultimately, we should live within our means and ensure that our money is managed in accordance with current financial situation," says Ester Ochse, Product Specialist, FNB Wealth and Investments.
The fundamental principle around effective money management is to understand your finances and acknowledge what your responsibilities are. Ochse explains that "We need to trust ourself enough to save more and spend less. This doesn't mean that we should suppress our desires, but rather focus on things that are important like a retirement, education or buying a house."
Relationships are based on trust and transparency. By having a view of your household expenses and spend we can ascertain how we use money or a monthly basis. "Family discussions around money is important and will help you determine how your finances have been managed and maintained in any household. Have a truthful conversation with your family as this will help determine were unnecessary spending takes place," says Ochse
She advises households to consider the following money management questions when discussing finances. As a family;
- How much money do we earn each month?
- First save or pay our debts?
- What do we spend our money on? entertainment/groceries/rent/clothing etc
- Do we have appetite to save or invest once our monthly expenses are covered?
- Have we considered family emergencies?
- Is our budget up to date?
- Do we consider our needs, wants and responsibilities?
- Are we covered for future retirement and rainy days?
These questions can help in defining your financial goals. "Sticking to your money goals is important as this will help you steer clear of financial burdens. This should be practiced from a young age," concludes Ochse