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BOITUMELO NTSOKO: A new year often brings resolutions around how we can better our lives going forward – ranging from wanting to live a healthier lifestyle, exploring different career prospects, and to even travelling more. One of the top resolutions for a lot of people is getting a better handle on our personal finances. Evidence of this is the numerous savings challenges that pop up on social media in January.
But to get a better handle on your money you first need to understand your relationship with it. If you have a toxic relationship with your finances it’ll be harder to achieve your savings goals.
Hi, I’m Boitumelo, and in this episode I’m joined by Thulisile Nkomo, who is a private wealth manager at NFB Private Wealth Management. She’ll talk us through the signs of an unhealthy relationship with money, the common financial mistakes people make, and how to ensure that our finances can help us rather than hinder us. Welcome, Thulisile.
THULISILE NKOMO: Hi, Boitumelo. Thank you for having me.
BOITUMELO NTSOKO: Thulisile, why is it so important to have a good relationship with money?
THULISILE NKOMO: One of the most important realisations we need to have as people is that having a healthy relationship with money is one of the vital things we all should strive for.
How we interact with money determines our financial wellbeing, and our financial wellbeing spells the state or quality of our daily lives.
There are certain habits which can either land us in debt or lead us to financial success, and these are signs that can serve to indicate the type of relationship we have with money. Our relationship with money might be influenced by our upbringing or our culture. We can also inherit good and bad habits with our money from our families, or as we grow up.
BOITUMELO NTSOKO: How do I identify if I currently have an unhealthy relationship with my finances?
THULISILE NKOMO: You know you have an unhealthy relationship with money when your income is not able to meet your basic needs, when you are now living above your means, where you start borrowing to finance your basic needs, when you’re not able to adjust your lifestyle to what you can afford on your income, and when you start taking out loans to fund holidays and expensive clothes.
Sometimes when people start making debt the answer to everything they become overly indebted and they’re not able to service their monthly financial obligations – and at times they tend to borrow from Peter to pay Paul.
At times people feel guilty when they spend on themselves, and that should not be right [either] because you need to be able to also spend on yourself [without] becoming an emotional spender.
By that I mean shopping as part of therapy. So people [should] just stay away from shopping when they’re not in an emotionally good space. It’s important that people go to the shops for the right reasons, not [as a] cure or as part of their therapy.
BOITUMELO NTSOKO: What are some of the common mistakes that keep people in an unhealthy relationship with money?
THULISILE NKOMO: They tend to compare themselves to others. You’d find at times when a friend buys a car they want to buy a better car so that their friends can see that they’re doing well. Or if their friends’ children go to an expensive school, they feel that they’re missing out and they should be taking their kids to those expensive schools as well.
You need to always keep company with people who share the same financial values you do because, if you don’t, you’ll find yourself spending a lot of money that you don’t have just to please your friends.
[Something] that I feel is important for most South Africans is setting boundaries, especially when it comes to families. Sometimes our families can be our downfall when it comes to finances. We need to be able to say ‘no’ to our families when they ask for money. We should not be financing our family’s lifestyle just to show people that we’ve made it.
We should all have a spending plan. Not having a spending plan is not good … some people don’t even know how much they spend on a monthly basis. You need to live for today and make sure you’re taking care of tomorrow. A lot of people live for today with the hope that tomorrow is going to take care of itself. They need to look at saving for tomorrow, having emergency savings, a savings account, saving for the kids – and also for retirement.
BOITUMELO NTSOKO: And if I’ve just realised that I have an unhealthy relationship with my finances, how do I improve this?
THULISILE NKOMO: You need to take time to understand your individual financial standing. You need to be honest. That sometimes can be very hard, because you’d find that you are to blame for your situation. So being honest is the first step of moving forward. You need to identify your weaknesses and development areas.
So, if you feel you’re struggling financially and you need someone to assist, you should not be scared to reach out to a professional who will help and guide you to a better financial standing.
You need to live a balanced life where you are able to spoil yourself. That means in your budget you put [aside] a portion that is just to reward yourself, to say, ‘I work hard, I deserve a reward’ – and not assume that having more money will be an answer.
From time to time people change jobs often because they feel they’re not earning enough. At times that might be true, but sometimes it goes back to how you are allocating those resources. If you are able to allocate those resources, you’ll be able to handle more money.
Talking about money – having an honest conversation with your partner and your family about your financial standing – is very important. Communicate your goals with them to say this is where I want to be, and this is how I plan to do it. Those people can in turn help you, holding you accountable for what you said you want to achieve from a financial wellbeing [point of view].
BOITUMELO NTSOKO: Now, if I’ve done the work, how do I then make sure that I don’t slip back into my old habits?
THULISILE NKOMO: You need to make sure you make this change a part of your life.
Get your family involved in the journey, reward yourself for every milestone you achieve, celebrate the big and small victories like paying off a credit card or paying off that loan.
Take time to appreciate the journey. Look back on where you’ve come from [and] to where you are going.
You need to set realistic goals because, if you say that you want to pay off a loan but you don’t have enough money, that really does not make sense. So the goals need to be realistic.
If you don’t achieve the goal that you set, you need to review what went wrong and what you can improve going forward.
You need to keep an eye on the prize, as having a healthy relationship with your money will have a positive impact on your personal wellbeing and you’ll be much happier.
BOITUMELO NTSOKO: Thank you so much Thulisile, for those valuable insights. That was Thulisile Nkomo, who is a private wealth manager at NFB Private Wealth Management.