Financial savviness in the time of Covid19
Goodness, it's been an age since I last wrote something here! Yikes. But that's life - tends to run away with you.
I speak for all of us when I say that 2020 has been A LOT to handle. I was already wobbling in all sorts of ways before Covid19 lockdown happened, and now ... Well it's hard for most people to get through a few days without feeling the creep of financial and emotional anxiety. There is, however, nothing that gives me more hope and joy as a young adult, freelance opera singer, and vocal coach than to log in to my 22seven account to view the nest eggs and growing money-for-jam accounts that are linked there. Yes. Me. An opera singer. I'm interested in being financially savvy, stable, and sharing that knowledge with my friends, family and followers. So let's get to it.
Happy National Savings Month! That's right, July is the month (if you haven't already started the journey), to start saving and getting savvy. There's a myth that financial-savviness belongs solely to the brains of accountants, business folks, and financial advisers. That the onus is on them to manage our money for us, for which service they receive a lumpy sum disguised as a "small" percentage that we often don't calculate. That's an old model which none of us can actually afford to adopt any more. It's just a case of educating ourselves on the topic.
Enter The Fat Wallet podcast - a South African weekly podcast about all the money questions we are no longer too embarrassed to ask financial gurus. This initiative is hosted by Kristia van Heerden and Simon Brown, two Saffas passionate about empowering their fellow Saffas to become self-motivated, financially-independent goal-setters. They discuss bank fees, funeral policies, ETFs, marriage contracts, insurance, home loans, and which finance schemes and banks are hooks versus crooks. This podcast is far from boring; rather, it is a quirky, humorous, swear-word sprinkled, hour-long educational conversation. Do yourselves a favour, and listen in: https://justonelap.com/the-fat-wallet-show/
A certain person in my life asked me the other day what I enjoy doing - what one thing that sparks joy is, for me. I bashfully admitted that one of these activities involves logging onto my 22seven account to smile at the account balances of reward programmes which give me an encouraging net worth figure that reflects beyond the sum in my bank account. It sounds lame, but really, it's so empowering to watch the pennies that you painstakingly put away grow, and visually be reminded about what assets and reward programmes cumulatively improving my actual financial portfolio. https://www.22seven.com/
One of the most powerful means of keeping ones head above water during a financial crisis and global pandemic is to have established or begin establishing a splurge and an emergency fund which respectively afford you an inflation-beating monthly interest rate. The platform I'd opt for right now - despite the sucky change in interest rates that occurred 1 July 2020 - is TymeBank. I'm using the GoalSaves to save for different things and build up a strong emergency fund for freak accidents where I ding my car, have a medical emergency not covered by medical aid, or for periods of life where I'm unemployed ... Like now - thanks Covid19! The general consensus is that ones savings should be 15% to 30% of ones salary, so that you land up with 3 to 6 months of funds that will cover your monthly expenses for a rainy period. When you're starting out, this percentage might not be possible. That's okay! Just deposit that R50 monthly instead of buying another magazine / a couple of chocolate bars.
You can open up to ten GoalSaves, putting as little as R5 in each. Here's a hack suggested by guru Patrick McKay: Say you need 4 GoalSaves: 1 for emergency funds, 1 for a splurge fund, 1 for a trip you'd like to take, and 1 for the loan you owe your partner/spouse/friend/parents. Open 8 GoalSaves so that when you give notice to withdraw funds from one to pay your person back, you have a clone account that has quietly reached the 6% interest marker with only R5 in the account, and is ready for you to deposit funds into it. Check it out here: https://www.tymebank.co.za/banking/personal/goal-save/
Investments ... Horror stories of dabbles in the stock exchange and life savings vanishing down the drain flash before your eyes. You want to skip this paragraph? DONT! Drag your eyes right back here ... Thank you.
EasyEquities. I started investing in the stock market with them in May of last year, and I've built up a really good nest egg, simply by depositing money that I could afford to every month into my Tax Free Savings Account (i.e. R50 - R250 / month). Aside from the fact that you passively invest in your portfolio with free educational guidance from the platform, thereby skipping the fees and necessity of a financial advisor who (supposedly) actively manages your portfolio, the interest that you make by investing in the stock market versus simply saving money in a bank savings vehicle is WAY higher. What's even more awesome is that you can deposit up to R36 000 per annum and up to R500 000 in your life time, into your Tax Free Savings Account.
As a freelancer who's employment does not currently come with any benefits, I'm treating this as a superpower Retirement Annuity. So I buy shares, and I leave 'em there till I retire (and maybe leave it there even then). Diversifying your portfolio is important, which is what EE does best. The product I hold shares in is Satrix MSCI World, which is comprised of global ETFs, bonds and property. It's comprised of just over one thousand top-performing companies, and is a self-cleaning mechanism. This means that if one of the companies in the umbrella goes belly-up, it's quickly replaced by a better-performing company. So very low risk, and usually jolly good returns. I'm currently sitting on a growth margin of 23%. Which bank do you know that offers that kind of Return On Investment!? It wasn't badly hit by Covid19 for long, for this reason, and bounced back quite quickly. Also, compound interest is such a babe!
Need I say more?: https://www.easyequities.co.za/about-us
Need a short term, money-making mechanism? Monetize your grocery spends by swapping your shopping data (till slips) for cash back on select items! Take care of the pennies and the pounds will look after themselves: https://www.snapnsave.co.za/account/identifylogin
Another mechanism to use is Old Mutual Rewards. You watch infographic videos about financial savviness on MoneyVersity and soft sale marketing about Old Mutual, and receive points that translate to money vouchers to use in stores like Edgars, DisChem etc. A select number of times a month, when you categorize a transaction on 22seven, you earn points here too. I'm using my account year-round so that I'll have enough to contribute to a fancy pants bottle of perfume in DisChem that I've had my eye on for a while. Small hacks = cumulative saves.
In a world of job insecurity, get comfortable with the notion and pursuit of side gigs, and/or becoming a T-shaped individual. Good at admin? Investigate part-time / ad hoc secretarial, administrative, proofing and tutorial jobs. Are you a good musician? Explore the world of online courses / e-learning platforms, and the digital streaming arena. Do you enjoy practicing yoga? Maybe your friends would like to practice it too, with someone they know and trust, like you! Don't box yourself in. Step out! I'm baking for a weekly eco-friendly produce market, and I bung every cent immediately into my GoalSaves in TymeBank.
One last point: track your income as well as expenses with fanaticism. Evaluate cellphone contracts versus pay-as-you-go, cancel that stagnant gym membership and work out at home instead. Nike Training App is super cool. Pool grocery shops with friends / family so that you're buying in bulk ... The list is endless. Keep the cost of living low so that there's more to live comfortably on and to save.
I'm going to end with a quote, here, which we could all do with a reminder about from time to time. Someone on Facebook shared it.
"You do not need to apologize for being XYZ age and not being in a financially secure position. You do not have to apologize for being XYZ age and not owning a car. We all start here. It is not your job to keep up. So long as you are actively working to improve your current circumstances, you're doing good".
I hope that this inspires you simply to start now. You'll already be on the road to improved social, emotional and financial security. And THAT'S adulting.
Love and Light,
The Forest Weaver xx
