10 Important Personal Finance lessons I have learned

I don't need to remind you how difficult things are right now. Currently, our economy is in the doldrums, and unemployment is at 27.7% according to Trading Economics. With reduced incomes people are literally forced into poverty. 

Stats SA reports that the number of persons living in extreme poverty (i.e. persons living below the 2015 Food Poverty Line of R 441 per person per month) in South Africa increased by 2,8 million, from 11 million in 2011 to 13,8 million in 2015. 

Research by McKinsey & Company indicates that the majority of South African consumers are under tremendous financial pressure due to higher prices and low real growth in wages. To buy what they need, many South Africans have had to dig into savings or make purchases on credit, and are living from paycheque to paycheque.

But in a city like Joburg, it’s impossible to ignore the stellar spectrum of wealth and lifestyle choices. You can see this just about anywhere. You see the fabulous houses, the fastest cars, and the fanciest clothes, while most people are left with peanuts. With social media being more prevalent than ever, we have an in-depth look into other people’s lives. 

I know staying positive can be hard to do when you live off your credit card or meager salary when others have it this good. But I've learned not to compare my finances with anyone's else. Envying the financial lives of others makes us less appreciative of our own, even if what we have accomplished is substantial.

So here are 10 important Personal Finance lessons to keep me sane in this challenging times.

1. Small efforts matter. Often times we need to make big life changes in order to see progress, but there’s power in small efforts. They add up and more importantly, jumpstart a healthy mental shift. The specific rand amount you’re able to save is not as important as the actual act of saving.

2. A lot of people worry so much about the present they forget they need to prepare for the future. It’s easy to get preoccupied with paying today’s bills and that you don’t put money into savings. That’s a huge mistake that will keep you poor in your old age. Managing your finances well, minimising waste, and saving are all good things, and are essential to being financially successful, but they work so much better when paired with the right mindset.

3. Habitual putting off your financial responsibilities transforms procrastination into avoidance. Taking care of your finances addresses the nagging feeling of unease, and allows you to relax in all areas of life. Give yourself the gift of peace of mind: engage with your money! Engagement fuels your motivation when your energy and enthusiasm are put to the test.

4. You will always be faced with decisions and will need to consult your inner wisdom to guide you to a choice that aligns with your values and priorities. Others’ values & priorities may be different and you must learn to be okay with that if you hope to have peace. There is no value in comparing your financial situation to that of your friends, neighbours or colleagues. The Instagram life is NOT real. 

5. Money impacts all of your relationships – be it your partner, your child, or your parents; and each requires some consideration and communication to be healthy. Don’t be discouraged if you try to broach the topic and it’s a non – starter. Be patient and gently persistent. Your relationships are worth it.

6. Most of us identify with either the “I have less” or “I have more” camp. However, it’s important to remember that you belong to both groups. Someone will always have more and someone will always have less than you. A vast majority of us live in the middle and identify most with the “I have less” camp. Practice gratitude.

7. Your financial future really has no relation to your financial past. There are plenty of examples of people who have gone from homeless to incredibly wealthy. It’s a choice. Your choice. And if you want to you can change your money story.

8. Learning discipline with money is not always easy, but it’s necessary if you want to get ahead financially. If you have a lack of financial disciplineyou will always struggle with money whether you make R10,000 a year or R10 million a year. Pay attention, ask the right questions, and you will develop more spending discipline as time goes on. It’s not the money; it’s what you do with it that counts.

9. Whether you find yourself in chaos from divorce or from some other twist in life’s journey, there are things you can do immediately to gain control, find clarity around where you stand financially. Find a trusted friend, relative, or professional financial advisor to serve as a financial support person  someone that can help keep you balanced and focused.

10. Forgive yourself every time you make a financial mistake.Getting caught up in regret is just another way to avoid moving forward. Forgive yourself for your past inaction then congratulate yourself on facing reality and making a commitment to change. Be patient and recognize all your wins, no matter how small they may seem right now.You are building a firmer foundation for your future and taking responsibility for your financial choices. Be proud of yourself.

Remember this is a journey. And you won't always achieve everything right now but you can daily take steps to educating, enlightening and empowering yourself about money. Financial freedom is possible. But it takes being open to a mindset shift, a commitment to having a different relationship with money and courage to confront some of the challenges you may have been trying to avoid.