Research shows that approximately 68% of South African households do not have a financial plan, and 10% don’t have a budget. We all know that it’s not always easy to plan for the life you want and still manage to live in the moment and enjoy all of life’s little pleasures simultaneously, but financial planning is important. Let us look at the practical, simple steps you can take towards improved financial wellness, and also get an understanding of why people don’t budget.
3 key elements required for obtaining and maintaining financial wellness
- Having a budget,
- Having a financial plan, and
- Having a financial adviser.
We believe that the key to thinking differently about personal finances is to understand the barriers and motivators that keep you from doing so. Research has found that the reluctance to physically write down and track a budget was determined by the following factors:
Emotional factors
- “If I put it down – it is real and scary.”
- “I am less accountable if it is in my head.”
- “Ignorance is bliss, better to be naïve.”
Rational factors
- “I track my budget using banking SMS’s / emails.”
- “Once all my debit orders have gone off I am comfortable that I have paid all my debt.”
- “I draw cash for the week, and once it is gone it is gone, so I ensure I make it to the end of the month.”
What is the solution?
The first step is to find out where you currently stand. Completing our financial wellness questionnaire will help you with that. It will also help you identify and gather the right financial wellness tools for your needs. You might also want to read our article on budgeting tips to help you budget better.
Remember, no matter how scary the numbers may be, you are already on the right track by starting here.
AUTHOR: MULTIPLY
This article was originally posted at http://blog.multiply.co.za/2018/01/the-elusive-art-of-effective-budgeting.html