5 Smart ways to get your finances organised

I have several long and short-term goals – taking longer holidays in the Caribbeans or the Maldives, enjoying weekly spa treatments, saving money for a comfortable retirement. But I only have so much income with which to achieve these aspirations.

That is why I understand the allure of the lottery. It is hard to read about the Powerball jackpot of 
R85 million without daydreaming about what you would do with that kind of money. There are times when I've been tempted to play the lotto. I know a lot of people who play. They are yet to win.

For me, winning the lottery is the modern day equivalent of a miracle. Even though I believe in miracles, this is one miracle I don't believe in. I've heard of people winning but I don't know those people personally. I believe the chances of winning big are very slim. You're 300 times more likely to get struck by lightning in any given year than win a -- no matter how frequently you play.

I know that there is a lot of psychology behind buying lottery tickets. For some it’s the dream of escaping their situation; for others it’s an insidious form of taxation that tends to be paid by lower income families. But people do win and winning can be life changing for better or worse. And there’s a lot to be said about the “dream” or hope of winning.

When it comes to our finances, we can't live things to chance. You have to be prepared to do the work. Sometimes boring, sometimes exciting, sometimes introspective. There are no shortcuts. 
Although this may seem like a tiring task (sometimes it is), you can get off on the right foot by embracing the tried and tested financial planning ways to stay financial fit. Here are 5 Smart ways to get your finances organised.

- I don't like debt. I find it to be very repressive. I believe that if I really need something I have to save for it. Sure there are things that I will need debt for like a home loan but generally I have decided to stay away from it. Do you have outstanding debt hanging over your head? The only way I've learned to get rid of it is by changing my lifestyle for good. That alone brought me so much freedom and peace. The key is persistence and with the right plan of action. If you apply yourself you’ll start to see results in no time. I also learned a trick to pay off debt faster, if you pay half of your monthly bill every two weeks instead of the full amount once a month, you’ll make one extra full payment over the course of a year. Just make sure to ask if your lender applies these partial payments to your debt. It's also important to make a debt payoff plan that feels manageable for the long term. Like a strict diet, putting yourself on a too-aggressive payoff schedule can backfire and make you fall off track. Find balance that's realistic for you. 

- Do you really need life insurance. I bought my first life insurance when a sales person approached me. I was in my twenties and I didn't honestly think I needed it. I later cancelled it. I remember reading this statement about insurance: if you have anyone depending on your financially, you need insurance. That changed my perspective about it. So, when you purchase life insurance, you purchase it to ensure that your family is well taken care of. Insurance is a safety net for when risks go wrong.  This is a very big decision to make, so it is best you visit with your financial advisor or life insurance agent to determine your own needs. Make sure you shop around and remember to get the plan that will cover you the most with the least possible cost

- I tried my hand at real estate investing but I honestly don't have the patience to run with it. I had a small flat in Pretoria and was renting it out but ended selling it after three years of been given a headache by tenants. I removed myself from it. I know a lot of lot of people around the world are  multi-billionaires because of it. But I also know that it's not for me. If you are considering it as an investment just remember that it's not something to be taken lightly. Yes it can be profitable if you have the patience for it. It requires and takes time to make money from it. I didn't make a lot of money and I lost 25% of my initial investment because I sold too soon.  Why? Because house prices grow in value over time, not overnight. Another thing is real estate is also considered the least liquid of assets because of how long it can take to sell. Liquidity describe how quickly you can get your hands on your cash. The best thing to do for yourself before you take on this kind of project is to prepare, ignore the hype, educate yourself, and build wealth smarter.

- Investing involves risk. I have bought and sold shares at a loss so many times. I did it a lot during my twenties. The older I get the more patient I am with the markets. I really don't have a desire to be buying and selling at every turn of the markets. With that said, you cannot eliminate investment risk.  However, some approaches carry less risk than others. The secret is to invest at the risk level that is right for you and your goals. The rule about risk is that the higher the potential rate of return on an investment, the higher the risk you are taking. Stay calm when markets are not. Selling stocks when markets drop can make temporary losses permanent. Also investing too much in any single sector or asset class can result in major losses when markets are volatile. Diversify to manage risk. Always investigate the company and the investment before you hand over your money.

- When life happens do you turn to credit card debt? Do you have to take out an additional loan on your home?  It is an unfortunate fact of life: Bad things happen to good people. We all know what an emergency fund is, but how many of us actually have one? It took a while for me to establish one. I just needed reasons to do it. How much do you need to save? There is no “one-size-fits-all” answer. The ideal amount for your emergency fund is depended on your financial situation and lifestyle. The best way to build an emergency fund is to contribute a manageable amount to a designated savings account every pay period and make sure it's automated. After three or four months, make a modest increase to the amount you contribute to your emergency fund. It helps also to treat the transaction like a bill you pay each month.

When it comes to your finances, it is always wise to expect the unexpected. Whether you lose your job or your ability to care for yourself, life can throw you a lot of midlife curveballs. However, you can prepare for these possibilities.

What are your smart ways to get your finances organised?