Set out clearly defined financial goals
Write down an inspiring vision for the family and make sure it is backed by clearly defined financial goals. If you need assistance, speak to your financial adviser. Be sure to get everyone’s input and buy-in, as it might be harder to achieve it if the family is not inspired to do so.
Put images of your vision on your fridge, cellphone and keep talking about it as a family to keep it alive. For example, you can take a photo of your five-year-old child wearing a graduation gown and paste it on the fridge to symbolise your vision of your child going to university or college.
Draw up a family budget
It’s important to not only draw up a family budget, but to also openly discuss the monthly budget as a family.
This will make it easier to live within your means and deal with unplanned expenses or wants. Your budget is your plan for your money. When you’ve got a budget that you follow, you have better control of your finances and fewer money worries.
Sticking to the budget requires teamwork, continuously reminding yourself about the vision, ongoing encouragement from each other and tracking your family savings milestones from time to time. Reward your family at least every six months for reaching the milestones to motivate them to remain committed to the bigger plan. This will help even if you are not around.
Drawing up a budget and sticking to it gives your child an excellent example of how they can take control of their finances.
Get your debt under control
Only borrow if your loan is part of your wealth creation strategy and charge down your debt by paying it off faster.
Debt is not necessarily a bad thing – it’s just unfortunate that a lot of people don’t know how to use credit to their advantage.
The first step in getting debt under control is knowing how much it is and what it is costing you. List the amount of the debt and the interest rate charged. Then pick one debt and set aside an extra amount each month to pay this off.
Pay off the most expensive debt first – this is the debt that is costing you the most.
For example, if you have a bond at a 10% interest rate and a loan at a 20% interest rate, pay off the loan first.