Happy hump day chicsters! Before quitting my job at the end of last year, I realised that I had been working for a full 2 years. Here I was, a 27 year old big city girl with a very demanding yet financially rewarding job. What I did not realise then, was that I had subconsciously absorbed all my father’s wisdom on financial management because although leaving my job was scary, I had managed to save and pay for our wedding, moved to a new place, bought furniture, helped out at home, travelled and saved a year’s rent and groceries in 24 months! Not everything went according to plan at times as I blew thousands on shopping but I am proud that I learned 10 important lessons from the age of 7 working for my dad.
This post is really for newly graduates who are now working and suddenly need to ‘adult’ and make better financial decisions. While I will not directly address the need to stop renting as soon as possible or the fact that you cannot live off your salary, I would like to flag it. So as mentioned, 10 financial management tips for the newly independent big city chicster. Congratulations on that internship or job and do bring along your passport to financial management.
- Save 15% of your salary
I cannot stress this point enough! It does not matter how much you earn but as soon as you have an income, please ensure that 15% goes straight to your savings. Whether you allocate it to a Retirement Annuity fund or just save it, just make sure that you are doing that. Do not put it in a 32 days notice account, I have seen so many of my friends debit from a 32 days account until they deplete it.
2. Have a detailed monthly budget
I am a visual person and until I can see something, it is only then that I can consciously make appropriate decisions. A lot of people only write down the major expenditures like groceries, electricity, bills and rent. They forget the little things like going out, airtime and how you randomly buy snacks to munch on. In case you have not realised, for every gum, peanuts etc that you buy, it is still coming from your salary. My suggestion is to make an as detailed as possible budget. Include an amount for going out, snacks and transport. Should anything out of your control occur, then you have a realistic approach as to whether or not you have the funds for it.
3. Pay off student debt immediately
I did not personally have to do this, but my husband had to further his tertiary education via NASFAS funding. While the debt itself does not reflect on your credit score, NASFAS does start calling you as soon as you start working. Rather pay it up as soon as possible before your responsibilities increase.
4. Buy everything cash
I feel like this is one of the most painful financial lessons I have had to learn. If you cannot afford it, do not buy it! I know it is easier said than done but it is so worth it. Buying things cash helps you save money and teaches you to be content with what you have. Trust me, it is not worth it to pay interest no matter how low. At the end of the day, it is still an extra cost to your finances.
5. Do Not get a credit card
I find it so sad that South Africa has taken on the American culture of living beyond our means in buying everything on credit. We have glamourised having a Black credit card and feel important when we flash one amongst our friends. We all get a credit card thinking that you can manage your finances and pay it off before it incurs interest. But what we do not realise is that we open pandora’s box to temptation and before you know it, you are using it to buy clothes, go out and go on trips you cannot afford.
6. Do Not get a store card
My dislike for store cards runs so deep that whenever I get a message or call offering one makes my blood boil. Like credit cards, you say that you will only use it for emergencies and can handle it, but next thing you know, you are taking clothes you do not need and suddenly NEED this item. If you currently have one, pay it off, chop your card into tiny pieces and close that account. Whether clothing or furniture, trust me these things have a way of recycling themselves.
7. Make a list of items you need to buy
Much like the grocery list, as soon as you move into a new flat etc, make a list of everything you will need. Then go online and compare prices + quality. I do this to ensure that I do not buy things on impulse just because it looks so pretty or I am feeling emotional. I have a list for my bedroom, kitchen, living room, bathroom and wardrobe. This strategy has helped focus my shopping especially during sales.
8. Buy during sales
To be quite honest, this was one of the lessons I learned from my older sister and father. While my father did it for his miser tendencies (he is very stingy lol), my sister always bought her clothes out of season. So for instance, all stores had sales in Dec-Feb, she bought all her Winter coats now instead of in season. I tried this last year and I got a parka jacket for R750 instead of R1500 and coats for R800 each. The only time I bought a coat in season was when I saw that the one I love would not last until mid season sales. Speaking of mid season sales, do ask sales assistants when their next sale is. You do not want to buy an item on full price 2 days before the sale. I went through that and I just want to cry.
9. Stay away from fancy bank cards
I have a personal story to share about this stupid trend. So when I started working I was on a single digit monthly salary. FNB offered me a Gold Cheque account. 3 months later I got a salary increase and moved to double digits. FNB offered me a Platinum card. They told me about the benefits etc and driven by my ego to socially show much I was earning, I took it. End of 2015 I got a promotion and went into management. I received an even higher salary and was offered a Private Client Cheque account. Tempted by the exclusive and important looking black card, I signed up for it. Once I found out that I had my own private banker and access to business lounges at airports, I felt like I was hitting the career jackpot.I had so much pride whenever I went shopping and whipped out a black card especially at the Waterfront or when traveling internationally. It was a great point to prove then as a young, black, educated and blesserless individual. But in hindsight, I feel like I wasted almost R10 000 in bank charges in 2 years all to prove an unnecessary egoist point. So I am back to an easy account and paying R4.95 LOL.
10. Manage family expectations
I feel like this is such a sensitive topic and different people will react differently based on their family’s circumstances. Whether you are paying black tax or the breadwinner at home, please try to manage family expectations. Renting is not cool! I do not care if you stay at Camp’s Bay or Sandton and I know that economists now recommend renting etc. But we cannot deny that unless a place belongs to you, you will never fully decorate or design it the way you want. In order to do this, you have to bear heavy initial costs for a deposit, furniture and labour. You are also growing and evolving as a person. Things like eating healthy, going on holiday and the little things you love require finances and you need to do them to be able to function. Have a realistic conversation with your family on where you can assist and when. I want to renovate the kitchen at home for my mom, but I also knew that I wanted to get married young. I addressed this with my mom. Obviously other costs came up and I also wasted money, but I feel like I am now ready to start saving for the kitchen now that we have settled the wedding and couch. I will keep buying things slowly but my next big goal is to save for the kitchen by 2018 whilst saving for minor gifts such as a sisters holiday and our first Christmas with our families in Cape Town at the end of the year.
Keep if financially sound chic