We all make money mistakes, but the trick is to quickly identify and learn from them. Here, we look at the seven most common financial flaws – and how you can turn them around.
Financial Flaw #1: Retail Therapy
Impulse spending is one of the worst financial habits: you have your credit card at hand, you're at the shops and you think 'I might as well use this'. The best way to fix that is by simply leaving your credit card at home – don't go to the shops with it and only use it for purposeful purchases. And don't get a store card at all. When people go to the dietician and they have to keep a food diary, they're less likely to have that chocolate because they'd have to write it down. In that same way, write down what you spend – it's important to bring awareness to your spending habits. – Maya Fisher-French, Personal Finance Columnist
Financial Flaw #2: Not Paying Yourself First
"Paying yourself first" does not mean you can spend money on whatever you like, but rather that you should first invest a percentage of your monthly income for your future comfort – before you pay other people or companies. Two things make people move: pain and pleasure. The pain of sacrificing some money now is nothing compared to the pleasure you will enjoy in future. – Errol Meyer, Head of Advisory at Standard Bank Financial Consultancy
Financial Flaw #3: Denial
To fix your money matters, you need to do a personal financial assessment. Most people don't know where to start, but the first step is to get a copy of your credit report. Your credit report will tell you what areas need to be immediately remedied. If there's a judgement, default, or a creditor you have to pay – start there. If you're in arrears, pick up the phone and speak to your creditor to make payment arrangements. You have to be honest with yourself as well – be real about whether you need debt counselling, and all that it entails. - Samke Mhlongo, Wealth Coach
Financial Flaw #4: Procrastination
Be positive, present and take action. This strategy works for many sportsman, so why not for the challenges we have with financial matters? Putting away a certain amount each month for your retirement is the best way to ensure you can take care of yourself when you no longer want to – or can – work. The amount you presently invest in a retirement fund impacts your lifestyle in your "golden years". It should be comforting and empowering to know that you can control the amount of financial freedom you will have in your old age with actions you take now. This may mean cutting back on unnecessary expenses to ensure your future finances look healthy, but you'll thank yourself in a few decades. – Errol
Financial Flaw #5: Not Budgeting (Especially For Spoils)
Budget shouldn't be a grudge – they give you an overview of your cash flow and help you understand your financial position. It's important to also put your luxury items into your budget. Many people will put a zero next to clothing or entertainment, but they aren't being realistic. If you have a surplus at the end of the month, you can put some into paying off debt, and budget to have guilt-free spoils. If you like dining out, be prepared to make financial sacrifices elsewhere, it's all about priorities. – Samke
If you want to spoil yourself, budget for it. Put that money in an envelope every month, and prioritise what it is you want to do with it. What's important to you? If you want that cappuccino every day, then don't buy the pair of shoes at the end of the month. That way you get the maximum emotional enjoyment from whatever you choose to spoil yourself with. – Maya
Financial Flaw #6: Not Taking The Future Into Account
Though a grudge payment for many, purchasing life insurance is one of the most unselfish acts possible, as it proves you care enough for your loved ones to provide for them even after your death. The same can be said for a Last Will and Testament. Remember, it's not about you, or who gets the last say about what will happen to your assets upon death; it's about caring enough about the people you love and leave behind to give them the opportunity to comfortably carry on with their lives. – Errol
Financial Flaw #7: Not Ditching Debt
Debt is your worst financial enemy. We can have good debt: a home loan may be a good debt, since houses usually increase in value and the trade-off is to support a family. But, the same is not true for a luxury car, for instance, which loses value the moment it is driven off the showroom floor. – Errol
In a cash conundrum? Turn your financial future around by investing in a Fixed Deposit with Standard Bank today.