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Rather than complaining that you have no money, find out why you don’t.
There is a fundamental mistake most people make when it comes to managing money and that is that they believe that somehow they don’t really have the power over their financial situation. We prefer to believe that it is due to powers beyond our control – we either have too little money or we have expenses we cannot get rid of.
Philip became a convert to money management app 22seven when he realised that making more money was not the solution – in fact it was killing him.
As part of the Show Your Money Who’s Boss campaign in collaboration with 22seven, we interviewed individuals who are using the 22seven smart money app to take control of their finances. The one commonality seems to be how much we overspend on eating out and entertainment each month.
22seven convert Ashley did a little experiment and created a category for “alcohol” so she could see just how much money was spent on going for drinks with friends, networking, or purchasing wine for the house.
“I nearly died of shock to realise that I spend more money on booze than I pay my domestic worker who comes once a week. This app can reveal stuff about yourself that you never knew!”
For Jenny her main overspending was on eating out, by a long shot, but she also noticed she was spending far more on clothing than she realised.
“I guess because I don’t shop for clothes every month, I wasn’t realising how my spending on this category added up over time. I love that 22seven averages out your spending over a few months – my brain could finally make sense of my (bad) habits.”
Camilla never knew how much she was spending on “silly stuff” like fast food and bank charges, “22seven actually categorises the spending money so accurately that I almost fell on my back, I spent something like R700 on bank charges alone, which was very unnecessary.”
And then there is the cost of data. Once Andre, another 22seven user, was able to analyse his budget, he discovered his cellphone costs were getting out of hand.
“I adjusted some cellphone habits and saved money. I also saw an increase in my insurance premium and quickly phoned the company to query it. Turns out it was a mistake. The mistake would've gone by unnoticed if it weren't for the app.”
Dirk, who has been using 22seven for the last two years, admits that his eating out category was really scary, especially when he receives the little “nudge” from 22seven. This is a money reminder that is created each month just to remind you that this is actually the amount of money you are spending on a category that you don’t really need, and it also reminds you how much you could be making by just investing even 10% of that amount.
“The reality is that we don’t always want to know what is going on with our money, but the nudges are a nice way of doing it. It is like having a friend reminding you a bit.”
“I am a reasonably high earner, and living proof that having a good income doesn’t make one impervious to financial bungling, it just makes one an easy target for credit suppliers,” says Philip, who found himself with an unsecured loan of R120 000, two credit cards and an overdraft which were all sinking him financially. As a contract worker he found that he was having to work longer hours just to keep his lifestyle going and it was becoming unsustainable.
“I started out using 22seven because of another site – wellspent.co.za. They gave very solid, pragmatic advice for getting my finances in line. This included keeping a budget.”
Although Philip had been keeping a budget for years it didn’t really make him change his behaviour.
“If you blow it every month or fiddle it to show you what you want it to show you, it isn’t much use for anything than helping you calculate just how close you can cut it every month,” says Philip, who says it was only once using the 22seven app that he could see, interactively, what effect his spending was having on his monthly bottom line.
“Seeing the trend I was on I realised that if I don’t change it I’m going to end up a very unhappy person in a couple of years. I was constantly living behind the curve, always paying my credit cards and overdraft on time, but not really seeing the effect the interest charges were having on the bigger picture because I could cover them every month. 22seven gave me the ability to see what impulse spending was having in the long term, and seeing that picture drove the need to fix it.”
This, combined with the fact that Philip was about to turn 40 and those future pay cheques were running out, gave him the motivation to take action.
By cutting back on unnecessary expenses like bicycle accessories, electronics and eating out, over the past six months Philip paid off R170 000 of debt – which included his unsecured loan used to pay for his wedding, his one credit card and reducing the other by R20 000. He has reduced his overdraft facility by R25 000 and next month is hoping to close it.
“There are improvements I would like to make to the house, but rather than dipping into the overdraft to do that, I have deferred the expenses to when I can save up for them and pay for them cash rather than just heading to the overdraft or pulling money out of the bond.”
Building wealth
Budgeting and managing your money is not, however, just about getting out of debt. Hanno, starting his first job, was able to get a better handle on how to make his money work for him and not fall into the financial trap so many young people do.
“As a recent graduate, I only really started to have money, and subsequently ‘care’ about where it is going. I had no debts or any real assets, but am planning on getting married soon.
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“For a while I had been doing some manual budget tracking but once I started using 22seven and correctly categorising my expenses I found out just how lacking my manual expense tracking really was. I discovered many expenses that I not even aware of, such as banking fees, and monthly expenses I never wrote up.”
For Hanno a very powerful tool is his ability to see his overall net value.
“This is something I have never really thought of before. Saving is not just a good idea because it is a good idea. Saving actually means increasing my wealth. The app also showed me that I do not need to be a millionaire to invest and actually start saving for the long term.”
Hanno uses the 22seven app to help his financial planner gain insight into his financial situation and needs and he is able to link his investments to the app to see his overall wealth.
“I can now view my investments, not as a monthly expense, but as a growing asset.”
These are just a few of the people 22seven has helped with their financial management:
- How Afika got out of debt in a year
- Will is saving R800 a month
- Taryn now saves R2 000 a month, just on groceries.
- Sarah was spending more on her car than her kids, so she traded it in and now spends R4 000 less a month
