Personal Finance Tips

Your net worth—the difference between your assets and debt—is the big-picture number that can tell you where you stand financially. Keep an eye on it, and it can help keep you apprised of the progress you’re making toward your financial goals—or warn you if you’re backsliding.

I recommend the 22seven Budgeting and Investing App to keep track of your finances.

The bigger picture?

Finance can seem like an intimidating topic reserved for the JSE elite. However, the average investor can often outperform industry insiders by taking a common sense approach. There are three essential activities the average investor must master to implement an effective personal finance regimen:

  1. Budgeting
  2. Saving
  3. Investing

Following is a brief investigation of each component as well as helpful tools to assist in developing your own program.

Budgeting

The first component of a common sense personal finance program is budgeting, which involves the identification of goals, income streams, and expenses.

Goals

  • Three Month
  • One Year
  • Five Years
  • Ten Years

Income Streams

  • Recurring
  • Periodic
  • Once Off

Expenses

  • Daily
  • Weekly
  • Monthly
  • Annually
  • Out of the ordinary

An extremely helpful website that can assist you in developing a practical budget is Platinum Wealth.

I have created a budgeting spreadsheet that you can download and use in your computer (use the transactions sheet to update vallues) My Budget Sheet

Saving

After developing a budget which includes an emergency fund, it is important that you find a safe, accessible vehicle for your short term savings. Below are some semi-liquid products that you should consider using:

Flexible savings account

  • Choose your deposit amount and the frequency of your deposits
  • Reasonable Interest rate
  • Easy access to your money

High Yield Savings Accounts (Fixed)

  • Interest rate fixed for the full term
  • Money available on the maturity date
  • Single deposit or Multiple Deposits

Government Retail Bonds

  • Suitable - You can buy Retail bonds from Pick n Pay
  • Guaranteed Returns - The interest is guaranteed and will not be affected by any adverse effects in the bond market
  • No Charges, Commission Or Costs

Investing

For longer term and retirement goals, it is critical that you diversify your investments. Based on your goals, you can select products to meet your desired levels of risk and return. Below are some vehicles you can use to meet your investment needs:

  • Mutual funds
  • ETFs
  • Stocks
  • Unit Trusts

A ton of great investing information can be found in the investment section of Platinum Wealth for example How to buy shares on the JSE or How to get started with your TFSA

Another great thread is Advice needed for starting out with ETFs as well as the Stock Watch Thread