Achieving financial freedom can come through small steps such as learning financial literacy. Making your finances stretch and grow without putting a strain on your wallet is possible with these five tips we have put together.
Protect your income
Protecting your number one, which is your ability to earn an income, is vital. This will come in handy, especially on those rainy days. While having a savings account can be beneficial, thinking two steps ahead is just as important. What will happen to your expenses and loved ones should you fall critically ill or sustain a temporary or life altering disability? Who will take care of you when you need it the most? Investing in policies such as life insurance, disability cover, and income protection that can protect you from major life incidents that can drain you financially if you are not prepared.
Medical cover
Being sick can cost you, especially if you have children. Therefore, having medical aid that is affordable to you is important. Even in cases where it covers the basics, it can go a long way in terms of creating a financial buffer for you and your finances. Aim for a cover that you will be able to maintain in terms of the premiums.
S.M.A.R.T financial management
Finances are like any goal - you have to have a plan. Speaking to a financial advisor can help you plan a better route to financial management that works for you. However, there are also credited financial literacy sites which you can learn from when it comes to setting and winning at your financial goals. Remember to stick to S.M.A.R.T goals by asking yourself if your goal is:
Specific
Measurable
Attainable
Realistic
Time-bound
It will require discipline and smart ways of using what you already have to stick to your short and long-term goals. Once your financial situation improves, you can increase the set target.
Investing & saving
Knowing the difference between investing and savings can help you capitalise better. To save, you will need to know the basics of budgeting. Having a realistic budget is the first step. Knowing where to cut the unnecessary weight of expenses that are holding you back financially needs honesty with yourself and discipline.
This will give you the advantage of being able to save more towards an emergency fund. Investing on the other hand can be beneficial when you do not put all your eggs in one basket. Aim to diversify and slowly grow your financial portfolio. Taking on too much too soon can end up causing problems later.
Plan for retirement
Women live longer than men by seven years but are the highest group that faces financial trouble in their old age. Planning your finances for the day when you finally leave your job is the best thing you can do for your future self. Doing this as soon as possible can give you a head start to bridge the R2.2 million underinsurance gap that many South Africans face when they retire.
