Enjoy the journey to financial freedom with smart money management

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Enjoy the journey to financial freedom with smart money management

By Stienemarié Bonsma-Potgieter, CFP® – Financial Planner

In today’s fast-paced world, it’s easy to overlook the importance of managing our finances effectively. While many of the younger generation have no long-term financial plan, there is also a growing concern that many of us may overlook the present, focusing only on long-term, future goals. While building to a financially free retirement is undoubtedly essential, we risk missing out on living life to its fullest by fixating only on this goal. This article addresses the topic by taking a more balanced approach to financial well-being.

Contrary to popular belief, achieving financial well-being is not solely dependent on how much we earn but on how well we allocate our income towards our goals. Setting clear financial goals is essential and it may be helpful to set goals for different life stages to ensure we are not only focused on the future. Goals in our 20s may include reducing debt and travel whilst our time is still more flexible. Goals in our 30s may shift to settling down in a family home and focusing on hobbies we enjoy. Categorising goals by age can help us prioritise and plan effectively whilst fulfilling short and long-term needs.

To ensure we stay on track for the longer-term goals, the golden rule of ‘Paying yourself first’ can be helpful. This simple yet powerful strategy not only sets the foundation for future security but also provides a sense of reassurance, ensuring that our future financial goals remain within reach. By setting up investment debit orders, we are paying ourselves first and can be sure that we limit mindless spending.

Setting up the debit order is easy, but keep in mind that different goals require different saving strategies. Consider using dedicated accounts and investment vehicles suited to each goal’s timeline and risk tolerance. Saving for short-term goals like a holiday should be in a stable, interest-earning account, while retirement savings should be invested with share exposure to achieve inflation-beating returns.

Whilst we want to enjoy life, awareness of spending habits is key. Making conscious choices about where our money goes can lead to more fulfilling and sustainable financial decisions. Embrace the power of experiences over material possessions. Investing in memorable experiences often serves us better over the long term than the short-lived satisfaction of material possessions. It’s about investing in memories that will last a lifetime, and that’s a truly fulfilling investment.

Striking the balance between long-term financial security and enjoying the present is achievable with careful planning and mindful decision-making. By defining clear goals, prioritising savings and investments, and embracing experiences, we can create a foundation for financial freedom while enjoying life’s pleasures. Remember, saving and enjoying life doesn’t have to be either or—with smart money management, we can have both.

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