Five exercises for killer abs in 12 days!
Here’s how you can be a millionaire by your 30th birthday!
This [insert name of appliance or electronic device] changed my life!
Everywhere you look something or somebody is making promises about a new and improved life. From finances to fitness, health and household harmony, the world is filled with solutions for getting rich, getting fit and getting better.
The flip side to this massive pile of potential we all seem to be sitting on is: Why is it that we are still in debt, overweight, underperforming, or just not in this space of imagined bliss?
Derek Sivers, speaker, entrepreneur and musician, hit the nail on the head when pointed out that, if more information was the answer, then we’d all be billionaires with perfect abs. That’s a keen observation on the abundance of information available on how to fix, improve and optimise nearly everything.
This is particularly true in the case of managing personal and household finances. “Yes, there is a perfect logic to simply spending less than you earn,” says Saul Gur, financial manager at Teljoy, “but that doesn’t take into account that expenses occur – appliances break, needs arise, and convenience matters.”
Household debt among South African consumers has been in a worrying state for some time now, and further exacerbated by the impact of the Covid-19 pandemic, some reports suggest that South Africans are feeling better about their finances. And while that’s positive, Gur believes that what we really need is to be thinking more laterally about money.
Get comfortable talking about it
Money, not unlike sex, politics and religion, can be a difficult and contentious issue to talk about. Finance talk is usually fraught with emotion, whether we have it in abundance or are struggling to make ends meet. “Our financial decisions impact every aspect of our lives, which is why it’s crucial to become comfortable talking about it,” Gur believes.
He adds: “Money deals with numbers. There's an expectation that our behaviours when managing it are rational, but that’s seldom true. As it’s bound up with our greatest dreams and deepest fears, it’s arguably the most fraught and loaded topic of them all.”
Gur’s advice is to consider what it is that you like and fear about money, what it means to you, how it fits into your life, and how it influences the way in which you relate to other people, as part of an attempt to understand your own feelings about money. While these are always changing, if you’re clear about money’s role in your life, it becomes easier to discuss it with partners, children, parents, employers and even friends.
Divorce from debt
Everybody from Ralph Waldo Emerson to Warren Buffett has a quotable quote about debt. Whether you see it as the enemy of wealth, or stealing from your future self, the consensus is that high-interest debt is a bad idea.
Yes, debt should be avoided but rejecting it outright simply doesn’t account for the reality of life in 2021. “We’ve all had to resort to costly credit when the fridge unexpectedly stopped working or your laptop was stolen. Life happens, which is why part of better managing our finances is looking to safer, more flexible ways to meet our needs.” Gur believes.
Consider access over ownership
One of these more flexible alternatives is the rent-to-own model, a transactional system that offers the consumer the convenience of access to things like furniture, appliances and electronics, without the burden of ownership.
Gur explains that in markets like the US and UK, rent-to-own is increasingly popular as it offers consumers a way of acquiring the things they need without getting tied into costly hire-purchase agreements or having to take on high-interest debt simply to have a functioning microwave oven.
Rent-to-own removes the risk and cost of debt from the equation, and introduces a level of convenience that an outright purchase simply cannot offer: “Consumer goods like appliances and electronics, and even furniture, need to be replaced every few years anyway due to wear and tear, so it just makes sense to rent rather than buy,” Gur explains.
The real cost of “low” fees
While any type of saving is better than no saving at all, the administration fees of some savings products can significantly impact the value of the investment over time. In fact, says Michael Rossouw, Senior Investment Consultant at 10X Investments, “high fees on a retirement investment can reduce the total value of the investment by as much as 40%”.
Rossouw adds that the industry charges an average of 3% in fees for retirement savings products when there are high performing products on the market that cost less than 1% in fees.
“An extra 2% might not sound like a lot but you are talking about a percentage of your entire pot of savings. Over 20 years, that 2% per year can add up and substantially reduce the total savings and can mean the difference between a comfortable retirement and lowering your standard of living to survive.”
PERSONAL FINANCE