13 Jan Love your bank balance: Building financial wealth
Building financial wealth – money can’t buy happiness. But it, or a lack of it, can certainly contribute to making you unhappy. Here’s how to create a wealthier relationship with your finances.
In this world, we deal with money on a daily basis. It’s something none of us can do without. Money can buy security, treats, holidays, cars, independence and family homes. However, it can also give others control over us, bring enormous stress and grief, and cause disagreements in relationships.
The good news is that this does not have to be the case.
Glass half full – start by building financial wealth mentally
‘Our relationship with money is extremely important,’ says Netto Invest financial planner Richard Sparg. “When it comes to building financial wealth, many of us do not pay enough attention to what influences our decisions. Everyone is emotional about money and certain issues can cause us to make bad choices. As financial planners, my colleagues and I may draft an extensive financial plan for a client who then does not act upon it due to deep-rooted, subconscious reasons.”
In other words, a negative relationship with money could keeping you from achieving cherished goals. But here’s the good news: you can change your relationship to your money.
A healthy attitude helps to start building financial wealth
Money does not have to be the root of all evil. “If it’s used wisely, it can change your life and the lives of others for the better,” says Sparg. “It’s a very powerful tool and it’s central to what you can do with your life.”
The key to changing your attitude is getting to know yourself – if you can see what you’re doing wrong and why, you can make the necessary adjustments. It’s important to educate yourself. “Take the time to learn more about money,” says Sparg. “Education is crucial to understanding the basics of money management. There’s a lot in the press and on the web that is easy to understand.”
Another key to building financial wealth is to spend time with your money
Ducking and diving to avoid your bank statements and tossing bills deep into an in-tray doesn’t help. Sit down regularly to look at your finances and see what you can improve on. Come up with a plan for saving, spending and investing.
Speak to someone you respect or chat to a Certified Financial Planner® professional who will ask the probing questions you may not ask yourself.
Happily ever after – partners building financial wealth
“It’s crucial that you and your partner are on the same page financially,” advises Sparg. “If one of you is working and saving while the other is running up credit-card debt, it can cause enormous stress, friction and resentment.”
But how do you get it right? Start by talking about money.
To have healthy financial relationships you have to be open about what you want, keep no secrets and work together. Sparg suggests that you sit down once a year for a relaxed financial meeting. Enlist the services of a professional if it will help, and work through all the hard issues:
- Peruse the basics of your budget to see what needs pruning.
- How much are you saving? Is this enough to meet your goals?
- Is your retirement plan on track? What about medical aid?
- Are all your credit cards under control? Are you managing to pay the bond?
- Are your wills up to date? Are you adequately insured to ensure the family will be able to cope financially if something were to happen to you?
Once upon a time – parents building financial wealth
The ways in which your parents managed their finances could have an enormous influence on your financial choices, and not always for the better. Ask yourself the following:
- How did your parents handle their money?
- What were the disagreements they had?
- Did your family fortunes suddenly improve or plunge?
- Did your parents talk to you about money? And do they do so now?
- Did one of your parents hide things they’d bought for fear of angering the other?
We all have our own unique relationship with money as a result of the different influences on our lives. If money sense was common sense, there would be no need to think about this topic. However, there’s no time like the present to evaluate whether deep-rooted attitudes are preventing you from building financial wealth and achieving your dreams.
This article first appeared in the Foschini Club Magazine on 15 March 2013.