2025 Money Moves: When they Januworry, you will have money

05-12-24 / Daniel Nkosi

Johannesburg - The number of financially distressed households has more than doubled between 2021 and 2022. According to Salem Nyati, Consumer Financial Education Specialist at Momentum Group, financial literacy is a skill can help improve financial outcomes.

"For many South Africans, this should be seen as an opportunity to get serious about building a foundation for your financial future, and not waste money on unnecessary expenditures, during the holidays," she says. "Financial discipline is important, especially during the last few weeks of the year – It is the basis for a healthy and stable financial life. Remember there are plenty of temptations and family pressures to deal with, so stick to the plan and do not be swayed into a miserable January".

Managing personal finances can be a daunting experience, more so when you are responsible for other people with individual needs and wants. Nyati believes a life without financial stress is possible, and recommends the following practical tips, to cultivate financial discipline and pave way for a flourishing and stress-free 2025:

A frugal mentality

Stereotypes aside – The idea of frugality encourages people to only spend money in a restrained manner, to achieve a longer-term goal. Don't think of yourself as stingy or strapped, but rather as money savvy or savings smart. Essentially, having a frugal mentality is having a value-first mindset and it can help you discover what you can and cannot live without⁠ — as well what should never matter, to begin with. However, frugal does not have to mean inexpensive. For instance, buying an expensive and quality item that will sustain you for years to come, can be considered a frugal expense than getting the most affordable, and may potentially not last as long.

Being this strict about your finances can inspire you to take precautions about your financial situation; keeping a close eye on your credit record, maintaining an accurate personal financial records, ensuring you have the right insurance in place, as well as staying vigilant for fraud and scams. Keep an eye on every cent as spending adds up.

An emergency fund

South African economic future may be looking slightly brighter, but your personal fate has its own life. Hence it remains important to always prepare by having an emergency fund for financial shocks such as medical or other emergencies or an unexpected income loss. This way, you can keep up with your regular expenses without getting into more debt. Your emergency fund must always be accompanied by necessary insurance coverage, for your important possessions like cars, income protection, and house. Otherwise, you will need to work towards having a fully funded emergency savings account with three to six months of your expenses in available cash.

Once you have the safety net in place, consider having multiple accounts to keep yourself on task with the specific goals you are saving for, without the risk of funds getting mixed and confusing you. Also, for safety purposes – No large sums of money should live in transactional accounts. Set your savings in such a way that suspicious activities trigger warning across multiple channels. Using different bank accounts, for different security measures.

A regular review of your short and long-term financial goals

Always check-in with yourself, to see if any of your goals have changed, and couple that with understanding if you are overspending or underspending. This will give you a sense of where you have some extra cash to spend or save, however as this will help you with cash and savings management for the upcoming year. This review must include monitoring your debts and savings levels, to see if things are manageable and within reason. For expert advice, consider getting a Financial Adviser to guide you.

Make the most of your money with a strict budget

Budgeting helps you to better plan and control your spending, while enabling you to extend your buying power. It does not have to be complicated. That plan is what helps you prioritise what is important to you, find ways to achieve your goals, and helps you clarify your most important priorities. Most importantly, it enables you to maintain balance; helping you manage your expenses with your income, paving the way for you to live within your limits in the year ahead. With a strict budget, you know what it costs to fund your lifestyle, and you are able get a sense of how much you can save or invest.

"When you stick to your financial plan, seek reliable financial advice, maintain disciplined spending habits by living within your means, you can improve your financial situation," Nyati concludes. "You will also find that constraints allow you to develop a lifestyle that benefits your financial goals and vision for success. This comes with saying no to some things, to say yes to others."