LYNCH
DISCIPLINE AND self-encouragement plays a key role in achieving any goals we may set for ourselves. This is no different when it comes to money matters, and in fact, may be more discipline is required for saving as we have a tendency to place this at the bottom of the 'list'.
Therefore, the challenge going forward is to approach saving and the need to save with a different frame of mind. Saving should always be at the forefront of our minds as without it, we cannot realise financial prosperity and enjoy the comforts of life.
In embracing this new frame of mind, there are a number of factors that must be considered in order to achieve and maintain this healthy habit:
1. Living within your means: You should exercise frugality in adjusting your living expenses, so that you can create and maintain a regular saving plan. It is recommended that you set aside at least 10 per cent of your total income to create wealth. Remember patience is important, once that is embraced, you will reap the rewards later.
2. Credit cards: Pay off the accumulated balance every month. At about 45 per cent interest, it will be difficult to get ahead. If you are carrying a hefty balance on any credit card accounts, make it a top priority to get these paid off.
3. Automatic payments: This is a great way to have money transferred to a savings or investment account on a monthly basis. Using this technique, you won't have to remember to contribute to your savings plan every month.
4. Create a budget: To help you discover where all the money is being spent. Actually, writing on paper what you earn against what you spend is the easiest way of sorting out what you can and can't afford. It is the only way of coming up with a reasonable estimate for your weekly or monthly spending. Add up all your income such as - salary, and any other additional money that you may receive monthly - and subtract from it your expenditure such as rent or mortgage payments, the amount remaining should be allocated to spending or saving each month.
5. Keep track of spending: Make a note of every time you spend money and what you spent it on. Review this list weekly. Did you really need to buy that pair of shoes or that cellular phone?
6. Educate yourself: It is easier than you think to obtain information on the various types of financial options and products available, It can be accessed from the newspaper, the Web or just simply talking to a knowledgeable friend or colleague. Once you have garnered all the necessary information, you can begin to make a decision as to which savings/investment option is right for you.
If you have not started saving for 2006, don't be dismayed, as there is still time to follow the above advice. Remember, it is okay to spend your money, but you will be surprised how much you can accumulate if you start saving with a new frame of mind.
Claudia Lynch is a client services supervisor at DB&G Merchant Bank. To further discuss investing and the many options we have available, contact her at info@mydbg.com.
