In our ever-changing world, things like rising inflation and interest rates can feel like obstacles in life, especially when you want to set goals for your finances. Even in times where the economy looks uncertain, you can still set and achieve financial goals that will keep you afloat. But where do you even begin?
We asked our Head of Finance, Daniel Lipchin, 4 questions to give you top tips to help you set and achieve your financial goals.
What financial risks could potentially threaten my goals?
These can be divided into either Micro Risks or Macro Risks.
Micro Risks are risks which are within your own personal control, like car emergencies, unforeseen medical bills, and reckless expenditure. These need to be carefully managed and provisioned for correctly so that you have the necessary funds to cover such cases should they arise. These can seriously threaten yourfinancial goalsif not provisioned for.
Macro Risks are risks which are not in your control, like an increase ininterest ratesor inflation. These risks are specifically difficult to manage and can also seriously threaten your financial goals. It is difficult to make provision for these risks as they are largely unforeseen and impact the economy as a whole, not just you. If you are a first time home owner, and interest rates increase, like they have in the past year, this can put some serious strain on achieving economic freedom.
What tips do you have to help me overcome challenges when it comes to achieving my financial goals?
Budgetingis obviously the most common method of managing the journey to achieving your financial goals. It’s important to budget for things you don’t necessarily want to, like Macro and Micro Risks.
Try to put R500 away a month for medical emergencies if you are not covered by medical aid, keep some cash available for your vehicle if you know when your upcoming service might be coming up. Avoid purchasing luxury goods regularly, and definitely avoid eating out too often!
There is also no point in creating a budget if you can’t stick to it. Your budget doesn’t even have to be detailed; just know how much you have after all your fixed costs (like rent and utility bills) and debit orders every month, then try to work on a daily spending limit as a start.
What tools can I use to help me set my financial goals?
There are many budgeting tools. My favourite one is22sevenwhich actually links into your banking app and categorises your income and expenditures for you. It is also directly integrated into a number of trading platforms which makes investing very easy for anyone.
Are there any resources I can use to help me stay motivated to achieve my financial goals?
In terms of resources, for myself personally, motivation needs to come within. I am not influenced by being flashy or having the nicest car. Think about the opportunity cost before you buy those shiny new shoes, that cash could be better used to settle your electricity bill for the entire month! I ask myself where I want to be becausefinancial freedomis something that drives me to work hard and succeed.
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