What are some of the common money mistakes?

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By Sonia du Plessis*

Managing your finances is not about how much you have; it is about how well you manage what you have. Many people struggle not because they lack money, but because they have not been taught the simple tips and tricks that demystify money management.

All too often, this lack of knowledge produces fear, which can lead you to do nothing. I want you to avoid that simple mistake and take charge of your finances. Because you can, and you should. Here is how:

Start saving early and stay consistent

One of the biggest mistakes people make is waiting too long to start saving. The earlier you begin, the more you will benefit from the power of compound growth, which is also called the ‘eighth wonder of the world’.

Starting to save at a young age, ideally in your twenties, can lead to significant growth, of your savings, by the time you retire some 40 or more years later.

My advice is: make saving a habit. Automate it if you can, so it is out of sight and out of mind. Add an annual automatic debit order increase. If you have kids, teach them to save a portion of their pocket money –it is a habit that will serve them for life.

Protect your retirement savings

The newly launched Retirement Two -pot system allows people access to their vested portion of their retirement fund, upon resignation. Monies that you saved, after Two pot system came into effect, must be transferred to another approved fund (compulsory preservation). You however also have access to the cash portion. When changing jobs, it is tempting to cash out your vested portion, but this is one of the costliest financial mistakes you can make. It may feel like ‘extra money’ now, but preserving those funds will make a huge difference in your retirement years.

Know the balance between risk and reward

Another common error is avoiding risk entirely in your investments. While safer options like money market accounts seem secure, they do not give you the growth you need to reach long-term financial goals. A balanced, informed investment strategy can help your money grow while managing risks appropriately. People often fall into this trap, when interest rates are high- like what we are currently experiencing.

Take charge of your financial life

Far too many people leave their finances in someone else’s hands – often a partner or financial advisor – without staying actively involved. It is essential to understand your financial situation and have a say in the decisions affecting your future.

Do not just trust anyone selling a financial product. Take the time to do your research. Make decisions based on what is best for you, not what someone else recommends without explanation.

Remove emotions from investing

It is no secret that market fluctuations can make investors feel uneasy, but reacting emotionally often does more harm than good. Stick to your long-term plan and resist the temptation to make impulsive changes.

When there’ a will there is a way

Creating a will is one of the simplest yet most overlooked financial tasks. It ensures your wishes are respected and saves your family from unnecessary complications and stress. A Living Will can also be added as an annexure to your will- an important aspect to also consider.

Tips to move from fear to action

Here are my five key pieces of advice that can help you get on track and stay on track with your finances.

Start with a budget, to take control

It might sound basic, but a budget is one of the most powerful tools for managing your money. By going through your expenses with a fine-toothed comb, you will gain a clear picture of where your money is going. Knowing what you are spending is the first step toward making smarter financial decisions – and finding room to save.

Pay yourself first.

Before tackling bills or discretionary spending, set aside a portion of your income for savings.

Review big expenses.

Do you need the big house and fleet of cars? Ask yourself: Can I downsize or refinance big-ticket items so that I have more available for savings?

Avoid overspending on luxuries.

Dining out, premium subscriptions, and other non-essentials add up. I always suggest that clients look for affordable alternatives if your budget is not working out.

Keep your insurance intact.

While adjustments might be possible after retirement, insurance provides crucial protection while you are still working.

With these straightforward tips, I believe you should be able to take control of your finances, which help settle your nerves and set you on a path to long-term financial success.

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