Personal Financial Management Budgeting W Tong 082

Personal Financial Management • Budgeting W. Tong (082 922 5269 / wtong@vodamail. co. za) 1

Practices of the Rich 1 1. Change your mindset! Money works for you and not you for money! Invest in assets! 2. Educate yourself financially! 3. Pay attention to your money! Spend time to manage your money and investments! 4. Become financially responsible! 5. Pay God first (tithe)! 6. Reinvest your investment returns 7. Live debt free! 8. Adopt an automatic money system 1. Adapted from John Burley (p 57, Building Wealth 101, Trump University) 2

Money / Debt Proof Principles* 1. God is the source • • • Not your talents, employer, friends or family These are conduits but God is the source Talents, abilities, health is God given 2. Money is not for spending • • • First manage, then spend You are a steward / manager NOT a spender Money not managed will slip through your fingers * P 120, Mary Hunt, “How to Debt-Proof Your Marriage” 3

Money / Debt Proof Principles* 3. Never keep it all • • Give it away – no strings attached, no expectancy of return Give the first part to God- develops gratitude Don’t rob God (Malachi 3) To keep it all is to invite greed 4. Never spend it all • • • Once you give some, then pay yourself Save money for emergency, investment Live on the balance * P 120, Mary Hunt, “How to Debt-Proof Your Marriage” 4

Money / Debt Proof Principles* 5. No more new debt • • Debtor becomes slave to the lender Debt, uncontrolled can spiral out of control 6. More money is not the solution • • • Attitude and mindset is the key If you don’t manage your money you lose it Money management requires discipline * P 120, Mary Hunt, “How to Debt-Proof Your Marriage” 5

Where’s the money going? 1. Do you know how much and where you spend your money each month? Knowledge is power! 2. Track your spending for a month, especially the cash 3. Categorise and review your spend 4. Develop a spending plan / budget 6

Spending Plan / Budget 1. First know your current spending patterns 2. Apply the 10 -10 -80 rule – Give 10% away – Invest / Save 10% – Live within the 80% 7

Finding money you didn’t know you had /1 1. Simplify your life! Retrain your brain / mindset about money and how to use it 2. Distinguish between a need and a want! There is very little you need to live on! Delay gratification where ever possible! 3. Shop around for lower prices and don’t buy on impulse! 4. Pay cash/debit card where ever possible (giving away cash sensitizes you as to where your money is going). Leave the credit card at home if you cannot control yourself! 8

Finding money you didn’t know you had /2 5. Keep track of your expenses for 30 days OR do initial detailed budget / spending plan! 6. Cut up clothing account cards or credit cards if you can’t control yourself! You only need one credit card! 7. Beware of marketing that wants you to buy more! Telemarketing, shop adverts, etc. 8. Never pay full price! Check for sales! Everything eventually goes on sale! Do go for fashion / brands (why pay to advertise for someone else, they should be paying you)! 9

Finding money you didn’t know you had /3 9. Stock up when you can! Buy bulk where its cheaper! 10. Research on big ticket items! Holidays, travel, insurance, etc. Cut back! 11. Call for quotes on insurance each year! Eg. Car and household. Re-evaluate insurance as market values change and so should your insurance. Beware of insurance add-ons eg. Disability, credit insurance, scratches, other “protection” type offers 12. Buy a second hand car! A new car depreciates 20 -40% in first 2 years! Buy older than 3 yr cars! 10

Finding money you didn’t know you had /4 13. Service your car regularly – it potentially cuts down on breakdowns and other expensive repairs! Prevention is better than cure! 14. Ask for discounts and try not to buy full retail prices! 15. If you must use credit cards - Pay off credit cards at first opportunity, don’t let it attract interest! 16. Reduce your banking fees! Pay by debit card, avoid drawing too many times! Use only one credit card! Use your own bank’s ATM to lower costs! 11

Finding money you didn’t know you had /5 17. Eat before shopping: Don’t go shopping for groceries without eating at home first. Leave the kids at home or with family! 18. Don’t go and shop on an empty stomach 19. Stop shopping! Shopping should not be a hobby or an occupation! 20. Check item prices! Check brands either high on shelves or at bottom of shelves! Buy bulk on cleaning materials wherever you can! 12

Finding money you didn’t know you had /6 21. Food – eat healthier. Less processed items and more natural items! Processed food costs more and has the highest inflation. 22. Go meatless! The best sources of protein are not animal proteins but legumes / beans of various types 23. Exercise – take a walk. Do away with gym memberships – learn to exercise at home. A healthier lifestyle also cuts medical expenses if you don’t have a medical aid 13

Finding money you didn’t know you had /7 24. Turn down the geyser thermostat 2 degrees – summer vs. winter. Switching on and off doesn’t save electricity. It takes more energy to warm up the water from scratch. 25. Do it your self! You can save money by fixing it yourself! 26. Liquidate – sell / pawn items you don’t need or haven’t used in the last year 27. Don’t borrow from micro lenders – try and live within your means! 14

Finding money you didn’t know you had /8 28. Cell phones – NOT everyone in the house needs a cell phone. Go prepaid instead of contract. The best things about prepaid: – No contracts to sign – No monthly bills – No long-term commitments – No credit checks – No age limits – No hidden fees 15

Some reference material BOOKS: • G. Edward Reid, “It’s your money isn’t it? ”, Review and Herald Publishing Association, 1993 • Mary Hunt, “How to Debt-Proof your Marriage”, Revell Books (Baker Publishing Group), 2003 • Trump University, “Wealth Building 101”, J Wiley & Sons, 2007 • Robert Kyosaki with Sharon L Lechter, “Cashflow Quadrant”, Warner Books, 1999 WEBSITES: • Crown Financial Ministries, www. crown. org • www. cheapskatemonthly. com • http: //www. easypersonalfinance. com • www. johnburley. com/trump 16