Manage your money better with these 5 must-know skills
Managing your money right is the key to making the most of it and using it to live the life you want. The way you manage your money has a direct impact on your personal finances, and often when you do it better, you can ‘get more out’ of your money without having to earn more money.
Money management skills involve the ability and knowledge required to effectively manage and control your finances. The basics include knowing how to budget, focusing on saving and investing and managing your debt.
Here are 5 skills that can help you manage your money better and take advantage of what your money can do for you.
Maximise interest rates
Understanding the importance of saving and then putting away money is a great start. Since you want your money to grow, you want to place it in the right environment to do so. The key to optimising your money’s potential to grow is to make the most of its earning potential without you having to do anything.
One of the ways in which money multiplies is when it grows by earning interest, and therefore, you want to keep it in a place where it can earn the most interest. For example, placing your money in a high-yield savings account would give you access to a better interest rate compared to keeping your money in your transactional account or in cash.
Stay on top of cash flow
One of the most important skills for managing your money is staying on top of your cash flow, which means knowing how much money is coming in and going out each month and staying within what you can afford.
When you stay within your means, you don’t have to take on extra debt to cover your wants and needs, which also means you don’t have unnecessary expenses that are taking away from your financial goals.
Additionally, by keeping track of your expenses and income, you can identify areas where you may be overspending and find ways to cut back, or where you can free up money that you can save or invest to (further) improve your financial situation.
Tip: Use our Banking App and the various money management add-ons to keep track of your budget, have a full view of your finances and easily do your day-to-day banking.
Use credit cards wisely
Credit cards can be a valuable tool for managing your money. It’s a handy and safe way to make purchases, manage your cash flow and take care of your needs with ease, but only if you use it wisely. That means paying off your balance in full each month, not using more than you can afford to pay back and avoiding high-interest debt.
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Take advantage of tax
Whether you’re investing to grow your money, generate an income or save for retirement, you want to do it in a way that minimises the impact that taxes can have on your cash. Taxes can take a big bite out of your returns on investments, so choosing tax-efficient savings strategies, such as tax-free savings accounts and retirement annuities, means you can make the most of your investment returns or money’s growth.
Tackle your credit score
Your credit score plays a big role in your financial health as it determines how easily you can get access to credit/financing and how expensive it will be. Having a good credit score means potentially getting better rates and terms on loans and credit cards, which means it could be less expensive to pay back the money you borrow.
When your money is going towards debt, it’s not growing, and you’re losing out on the potential to do more with it. Paying less interest helps you to pay off loans or debt sooner, which also means you can get to your next financial goal faster.
Ensure you pay your bills on time, keep the amount of credit you’re using low and avoid opening many new accounts at once.
Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).
Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.
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