About a week ago we spoke about what it is to be a #SOPIE.
#SOPIE’s are different ways of making money.
I’d like to invite you to join me in taking up a challenge on improving our money situations by taking some practical actions in the next couple of weeks.
We are on a quest to transforming how we approach our finances.
I am not a financial adviser, but I am sharing the strategies that have worked for me and my family.
Remember SOPIE stands for;
Before taking on this challenge, promise me a few things! You are going to have an open mind, be honest with yourself and have fun.
Challenge number 1: Being a Saver
What is to save? Saving is the act of spending less than you earn in income and placing the remainder into a reserve account for later use.
Saving can be quite a painful if you feel you have nothing to save.
If your first thought about saving is ‘How can I save when I always more month than money every month? Ha ha I hope that makes sense!
Most of us don’t even get to decide what happens to our money, it flows in and out our bank accounts but there’s no trace of it.
Save with a Goal in mind and remember some sacrifices must be made for this to work.
I know saving money is hard in the beginning, but we are going to start somewhere.
Activities for challenge 1
- Map out your money activities.
- Note down all your sources of income
- Collect all your financial statements (the last 3 months) and receipts.
- Take 3 different colour highlighters, one for your monthly debit orders, one for all the variable costs and one for all your random costs.
- Check how much money can you keep in your account or pocket if you changed your spending habits.
- Check for all those debits/payments/subscriptions that you don’t need and cancel them.
- Start paying off your consumer debts – start with the ones with small amounts then move into the larger ones.
- Set up your monthly budget – Download a copy of my budget template.
- Be honest with your money habits.
- Start setting up your money buckets.
Note, it is very important that you do activity 1 before attempting activity 2.
Clearing your unnecessary expenditures and compiling a budget will give you direction on how much you are able to set aside.
Decide which bucket is more important and start with that one. Set up an automatic debit of your chosen amount into a deposit account (check options with your bank, some deposit accounts have fees, but some pay you some interest on your deposits)
Emergency bucket – for all your unplanned emergency expenses – Money you can access within a short lead time whenever necessary – 32-day notice account. I would recommend a min of R1000 a month, if that is too steep, start with at least R500.
You can have more than one emergency funds and categorise them accordingly i.e. medical fund, property/car breakdown fund, insurance payments, income loss fund etc.
Freedom bucket – for all your investments, retirement and generational legacy building expenses – Set an automatic debit for your freedom account,
Take it like a personal tax, this is you paying yourself first before paying everyone else.
I would recommend you save as much as you can but generally it is advised that you save 10 – 15% of your earnings. If you cannot afford that now – Start with a minimum of R500 a month.
Compounding interest can be a powerful thing. You don’t have to start with a large amount, the key is consistency and increasing your deposits in the long run.
When you have saved a significant amount – use this money to invest in income generating activities (we will explore more in the Investing challenge).
Project bucket – for all your current and future projects and expenses such as holidays, birthdays, weddings, car services, property maintenance etc.
Having a project budget will prevent you from tapping into your credit cards and emergency funds.
You know you are going to have these expenses so STOP acting like they are not going to happen and prepare for them.
Recommended amount will depend on your intended project.
I call this a journey because it is not going to be easy in the beginning but the important step to making a change is having a goal and acting.
Make this a habit and it will become easier.
Remember to print out the attached download to help you with this week’s challenges. And look out for the next challenge next weeks, we will explore ways of being an Owner.
Comment below or connect with me so we can share more ideas and tips on saving.
“Do not save what is left after spending but spend what is left after saving.’’