Stuart's Gallery



Spending Money PDF Print E-mail
For most people, almost every single decision that is made, is based on money.
Examples: Where shall we go on holiday? What car shall I buy? What lounge suite shall we get? Where shall we live? What shall we eat? What shall I do today?
Generally the option chosen is one that fits in with what the family or the person can ‘afford’.
Therefore it is important to sort out one’s relationship with money early in order to move forward with ease.
Three Step Process – a very brief overview of each.
Getting to grips with your financial position in this day and age is a basic three step process:
1. Identify your means.
2. Live within your mean, and
3. Expand your means.
Identifying your Means
If you are still not aware of how much money comes in to you each month and how much money goes out each month, it is high time to do your homework!
-          Make a list of how much income you receive each month.
o       Include the following ideas:
§         Salary
§         Rental income from properties
§         Dividends paid out from shares
§         Money from part-time work
§         Sales from ideas/goods you have created etc
-          Make a list of all the money you have spent each month – all payments.
o       Include the following concepts:
§         Medical Aid
§         Food and Drinks
§         Entertainment
§         School fees
§         Mortgage
§         Fuel/Transport
§         Cell and/or telephone and fax
§         HP repayments
§         Electricity and water
§         Rates / Rent
§         Insurances
§         Staff –domestic workers
§         Bank charges
§         Credit card fees
§         Interest charged
§         Pet care
§         Tax
§         Child expenses etc
Total each column.
Live Within your Means
Evaluate your columns.
Subtract your payments from your income column.
Hopefully, there is still money left once you have done this!
If not, NOW is the time to take action as you are not living within your means, but rather beyond your means.
In order to begin living WITHIN your means, it is necessary to relook at how you are spending your money.
Divide your spending into
a.       Absolutely necessary to carry on.
b.      Luxury and or simply – nice to have.
You have to be good and honest here if you wish to become financially independent and even financially free.
With any luck you can rectify your financial position by eliminating a few luxuries so that you can begin to focus on step 3.
If not, a closer scrutiny of your spending is necessary (this is worthwhile doing in any event as you begin to learn more and more as to where your money is going) and make adjustments to your spending habits.
It is important that you are disciplined in still committing to and making payments on your current HP agreements in order to reduce those debts.
Some ideas are:
-          Take a look at how much you are paying in fees on your credit card and see how you can reduce those fees.
-          Discuss with your home loan supplier how to reduce the interest on your home loan. Sometimes it is as simple as moving the payment to the date on which they calculate the interest. Etc.
There are many ways to reduce your expenses and debt, but more detail on that later.
Expanding your Means.
When you are covering all your expenses each month with the income that you are receiving, I find one sleeps better at night!
The exciting opportunity now is to expand your means going forward. In this manner, you are then able to grow the amount of available money to purchase that which your heart desires, the flat screen TV, the holiday to Ireland a new car WITHOUT just depleting your current resources.
In other words, you create more money in order to pay for that which you would like to spend it on.
A few examples of Expanding your Means:
- Start up a business from home.
E.g. Selling home-made fudge. Making and selling lamp shades.
Servicing cars. Etc.
That idea that you have placed up on the shelf – let it out into the open
and see if you can bring the wind up under its wings!
- Invest some of your spare money into the share market.
NB – Buy low, sell high. It is important to learn how the stock market
works and what is a good price for a share. This is an exciting
opportunity but requires application of yourself in order to make
- Buy into a business opportunity.
Often a business may require additional funds and will pay interest on the amount loaned to them. It is important to know how to read financial statements to know whether you are going to receive any money back!
- Invest in a rental property.
Remember – in order to gain your financial freedom, it is necessary to take a few CALCULATED risks. Some of the opportunities will work out. Some of the opportunities will not. Therefore DO NOT invest money that you need and DO NOT invest emotionally.
* Kerrith Fraser does not have any financial qualifications; her process is as a result of what she has found to work for her personally.
Financial Freedom for All