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Budgeting is a skill that takes practice to master. You’ll improve as you learn from experience. By avoiding these common mistakes, you’ll cultivate healthy financial habits and become a budgeting pro.

‍Mistake 1: You don’t track your spending

‍If you don’t know where your money is going, you can’t make informed decisions about your finances. With 22seven, you can see all your spending in one place. It’s easy to follow the money and make necessary adjustments to stay on track.

‍Mistake 2: You ignore the small expenses

‍Those small expenses add up. Take your daily coffee run – it’s only R30, but add that up over a month and you’re spending nearly R1,000! Keep an eye on seemingly insignificant purchases and try to identify areas where you can cut back. Doing this will free up more money to save and invest.

‍Mistake 3: You neglect your savings

‍Some people only focus on paying urgent bills, but you also have to allocate a percentage of your income towards an emergency fund, a retirement investment and other financial goals. Automate your savings by setting up a debit order – that way you won’t have to think about it, you’ll stay consistent, and you’ll build a safety net for your future.

‍Mistake 4: You don’t plan for irregular expenses

‍Budgeting isn't just about managing your normal monthly expenses, it’s also about planning for unpredictable things like paying for your car to be repaired or fixing a window at home thanks to that errant cricket ball… Set money aside each month specifically for these kinds of things. Bonus: If you don’t need to use the money, you can add it to your emergency fund.

‍Mistake 5: You don’t prioritise debt

‍High-interest debt is a killer. Ignoring your debt repayments or paying only the minimum amount prolongs the debt cycle and increases the total interest you’ll end up paying. Adjust your budget so that you pay more than the minimum whenever possible. You’ll clear your debt faster and free up more money for savings and investments.

‍Mistake 6: You set unrealistic goals

‍A budget only works if you have clearly defined financial goals, but if those goals are unrealistic then the whole process can quickly become demoralising. Be honest with yourself about what you can afford, then break down your long-term goals into smaller, measurable targets that you can track and celebrate as you progress.

‍Mistake 7: You don’t review and adjust

‍A budget is a work in progress. Your life circumstances can change, your income can fluctuate and your priorities can shift. Set a reminder in your calendar to review your budget once a month, or at least once a quarter, and make the necessary changes so that you stay on track.

‍Mistake 8: You don’t negotiate

‍Don’t just settle for the price you’re given – explore every opportunity to save money. Negotiation skills can lead to substantial savings, whether it’s getting a lower interest rate on a loan, a lower premium on your household insurance or a discount on that new washing machine you need to buy… Shop around, get different quotes, do your research and fight for the best price.

Nearly every supermarket and financial service provider has some sort of reward or loyalty programme. Banks, medical aids, insurance companies… Before you sign up, ask yourself these three questions:

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1 How much does it cost?

Some loyalty programmes are free to join, like Clicks Clubcard, Pick n Pay Smart Shopper, Checkers Xtra Savings and Woolworths WRewards. In exchange for some personal info and your purchase history, these retailers may offer you discounts and perhaps some customised weekly deals. 

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Other programmes have a monthly membership fee, or they have an indirect fee where you’re required to pay for certain products like medical aid cover or some form of insurance policy. The question is: Do you already have these products (maybe you already have medical aid through your employer, for example) or are you buying the product just to get access to the rewards? If it’s the latter, you need to make sure that the rewards are worthwhile! Will you get more than what you spend? If not, you’re losing out and simply subsidising the other members.

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2 How are the rewards earned?

A typical reward programme allows you to accumulate rewards or loyalty points based on your spending or engagement. There are usually lots of rules and limits for earning and spending. There will also likely be membership tiers – in order to earn enough rewards to cover your costs, you might need to attain a higher tier, which might require you to spend more actual money or spend more time engaging with the programme. 

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3 Will the programme change? 

Certain goals, like fitness goals for example, might be dynamic. In other words, it gets progressively harder to meet the goals, until you reach a maximum required threshold. At first you’ll find it easy to hit the gym once or twice a week, but soon it won’t be enough even if you go every day – you’ll need to get a fitness device to measure your heart rate and complete specific heart rate and time-related workouts. Before you commit to such a programme, take the time to understand if there’s a goal ‘cap’ in place, and whether you’ll realistically be able to reach it. 

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Spending goals can also increase to a point where you end up purchasing things that you don’t need in order to meet a target, or you try to game the system by artificially inflating your spend. (Raise your hand if you always get the bill at Bootlegger and your friends pay you back…) This can be detrimental to your overall financial health, not to mention a waste of time as you figure out how you can meet a goal that doesn’t fit naturally into your lifestyle.

If you do happen to be in the market for rewards, you can earn with Old Mutual Rewards just by using 22seven – here’s how! There’s no one-size-fits-all solution, but as long as you do your research and don’t overextend yourself (or your wallet), rewards can be a great way to earn a little something extra.

People get into debt for various reasons. Before you take out a loan, here’s what you need to think about.

‍1. Know the difference between good debt and bad debt

‍Good debt helps you acquire things that build wealth or increase your income over time. Some examples include a home loan (if the home will increase in value over time), a car loan (if it will enable you to earn more by having your own transport) and a student loan (if it will help you get a better-paying job).Bad debt comes in various forms, like store cards, credit cards (if you don’t pay them off in full each month) and any other short- to medium-term loans. This debt pays for items that don’t increase your net worth, like clothing and food. Avoid it! You’ll be worse off financially due to interest and fees on the account, and there’s a risk of falling into a debt trap where you need to take out new debt to repay previous debt.

‍2. Compare costs

‍Debt in South Africa is regulated by the National Credit Regulator (NCR) through the National Credit Act. The NCR determines the maximum fees and interest, plus the maximum credit life insurance that can be asked. The interest rates are based on the repo rate plus a percentage. Rates and fees are adjusted from time to time. If you apply for a loan, you’ll receive a pre-agreement and quotation, both of which are valid for five days. The quotation will specify the exact cost of the loan. Too expensive? Shop around! Here’s how the fees work for a typical loan – you need to consider all of them to work out the total cost:Loan value (how much you borrow)  + Once-off initiation fee + Interest + Monthly account fee + VAT + Credit life insurance

‍3. Only borrow what you can afford to pay back

‍This sounds logical but so many people get stuck. If you don’t repay your loan instalments on time each month, you’ll have to pay additional fees and interest. Late payments will also negatively influence your credit record – not to mention the stress of creditors phoning you for money!Remember, you don’t need to prove your success by owning material things. The legendary US investor Warren Buffet has been living in the same house since 1958.

‍4. Pay it back as quickly as possible

‍Try to pay a little bit more each month towards your loan, over and above the minimum amount. This requires discipline but it will dramatically reduce fees and interest in the long term.

‍5. Avoid unplanned debt

‍Plan ahead. At the beginning of each year, note the big expenses that you’ll have to pay, like school fees and bond repayments, and save for them each month. Use 22seven to budget and you’ll soon find ways to save even more, without having to take on bad debt.Savvy savers will also recommend building an emergency fund for life’s whoopsies. You can use this fund instead of taking out a loan if you need to pay for something unexpected like getting a new washing machine or having your car repaired. Just remember to top up your emergency fund again afterward.

FIRE stands for Financial Independence, Retire Early – it’s a strategy focused on saving like a demon and investing as much as you can while you’re young, which will then allow you to retire far earlier than normal. Want to give up the nine-to-five in your 40s? It’s possible!

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The main thing to understand is what ‘financial independence’ means. In the context of FIRE, it’s when the income you get from your investments is sufficient to cover your living expenses, which means you don’t need to work. But just because you don’t need to, doesn’t mean you don’t have to. You could do something that you’ve always wanted to do which might not pay as much, or devote more time to hobbies, volunteer work or travel.  

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Proponents of FIRE typically aim to save and invest at least 50% of their income – far more than the conventional figure of 10-20%. 

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How to do it

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1. Increase your income. Advance your career, start a side business, invest in income-generating assets…

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2. Decrease your expenses. Budget hard! Cut all unnecessary expenses. 

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3. Save aggressively and invest wisely. As mentioned, you’ll need to save at least 50% of your income. Invest all your saved money to take advantage of compound interest.

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Is FIRE right for you?

To be fair, FIRE is not the right strategy for everyone. You have to think clearly about whether this approach aligns with your personal and financial goals. Are you comfortable with reducing your lifestyle expenses to increase your savings? Can you manage the risks associated with market volatility, which could affect your investment returns? Are you prepared to maintain a frugal lifestyle, even after achieving financial independence? 

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Remember, embracing frugality doesn't necessarily mean denying all life's pleasures. It’s about making conscious decisions about what truly brings you happiness – and discarding all the other unnecessary stuff. 

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If you decide that FIRE is for you, remember to reassess your financial goals regularly and adjust your strategies accordingly. There’s no one-size-fits-all solution. Speak to a qualified financial advisor if you need some guidance. 

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That said, even if you just explore a few of the basic principles of FIRE, you’ll be able to address some big financial issues faced by many South Africans, like taking on too much debt, not saving enough for the future, and spending recklessly.

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It’s a marathon, not a sprint

If you're considering going down the FIRE path, start by understanding your financial habits and use 22seven to create a budget that allows you to save as much as you can. It’s fine to start slowly – becoming financially independent might take years, if not decades. Be patient and continuously reassess your budget as your life, income and financial goals change. 

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Remember, you have the power to shape your financial future! Whichever path you choose, patience, discipline and a bit of thriftiness will never do you wrong.

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For such a ‘serious’ industry, investment people and economists have their fair share of silly references. There’s tulip mania (a famous market crash in Holland in the 1600s, driven by speculation over the price of tulip bulbs), a Santa Claus rally (when the market surges just before Christmas) and the Super Bowl indicator, where the performance of the stock market can supposedly be predicted based on the outcome of the Super Bowl. (Spoiler: it can’t.) And then there’s the Big Mac index, which might be the most famous of the lot. Invented by The Economist in 1986, it’s a tool that offers insights into currency valuations and purchasing power across countries.

‍What is the Big Mac index?

‍It’s all about comparing the price of a McDonald’s Big Mac in different countries to figure out if their currencies are over- or undervalued. A Big Mac is pretty much the same everywhere: if it’s more expensive in one country compared to another, it means that country's currency is stronger. If it's cheaper, that currency is weaker.

‍Why is it important?

‍The index helps us understand how currencies affect international trade. If a currency is undervalued, it means that country's stuff is cheaper to buy, making their exports more attractive. Countries with overvalued currencies, however, might be more likely to import goods if they are cheaper to import than to manufacture locally. The Big Mac index also gives us a peek into how well government policies are working. If a country's currency is overvalued according to the index, policymakers might consider measures to weaken the currency, such as reducing interest rates or implementing quantitative easing (basically printing money). An undervalued currency might prompt policymakers to take steps to strengthen the currency.

‍Which factors impact currency valuation?

‍Inflation rates, interest rates, trade policies, government interventions and other market forces are examples. The Big Mac index offers a simple, easy-to-understand snapshot of how all of these factors play out.

‍How can I use it?

‍Travel planning! If you're planning a trip to another country, the Big Mac index will give you a rough idea of the cost of living there, and how expensive things might be.

‍Where’s Mzanzi at?‍

In January 2023, according to the Big Mac index, the South African rand was 45.9% undervalued against the US dollar. (The rand is in the same WhatsApp group as the Azerbaijani manat and the Malaysian ringgit.) Check out the index at The Economist. Next time you pass by a McDonald's and see a Big Mac, remember that it's not just a tasty burger – it's a little hint that can help you make sense of the global economy!

When it comes to personal finance, maths is not just a subject from school days. Take the time to understand basic concepts and you’ll be able to budget more effectively, manage your debt better and secure your financial future. Sit down, class: here’s today’s lesson.

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Budgeting: The foundation of financial success

At the heart of every successful financial plan lies a well-crafted budget, which aligns with your income and expenses. You don’t even need a calculator for this one – let 22seven do the number crunching. Link all your accounts, track your spending and use the budget function to make sure you live within your means and have surplus cash to put towards savings and investments.

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Compound interest: The 8^th wonder of the world

Understanding compound interest is key to building wealth over time. It  allows you to earn a return on the initial amount invested and also on all the accumulated returns. Basically, given enough time, your savings will snowball. You can maximise the power of this mathematical magic if you allow your returns to be reinvested. In other words, keep your gains in the market for as long as you don’t need the money, and your investment should hopefully grow exponentially. (Big word: it means ‘a lot’.)

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Debt management: Make calculated choices

Debt is a reality for many South Africans. But if you understand the maths behind it, you can deal with it more efficiently. Start by assessing all your debts and their associated interest rates. Consider consolidating the high-interest debts or renegotiating interest rates where possible. By paying more than the minimum due each month, you can get rid of your debt faster and minimise future interest payments. (Use an online calculator to estimate how much quicker you’ll clear your debt if you increase your monthly repayments – google ‘debt calculator’, there are many available.) 

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Investing: Watch your money grow

Investing is not just for the wealthy – it's a powerful tool for everybody that allows you to grow your wealth over time. Don’t be intimidated; rather empower yourself by getting to grips with the fundamental concepts. Start by learning about the various investment building blocks like equities, bonds, property and cash. Next, research how to gain access to these by way of unit trust investments or exchange traded funds, for example. Consider diversifying your investments to minimise risk. The internet is your friend: make a cup of coffee and start reading. 

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Retirement: Secure your future 

Retirement might seem like a distant concept when you're in your 20s or 30s, but starting early can make a significant difference. And guess what? When you’re looking at long-term financial planning, maths comes into the equation yet again (excuse the pun). It’s quite a complicated business: you need to estimate how much money you’ll need in retirement, taking inflation into account, then set savings targets depending on how much you can contribute to a retirement fund each month, with a buffer in case things go wrong. You also need to assess your retirement plan once a year, at least, and adjust it according to how your life has changed or might change. 

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Get help from a pro

Remember that genius kid in the front row who made maths look easy? A good financial planner is like that. They’ll be able to look at your entire financial situation and help you understand all the concepts in this Slice. They’ll also help you implement them so that you can lay the groundwork for financial freedom. Put your thinking cap on – an A+ is within your reach! 

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Financial wellness goes beyond what’s in your bank account – it’s an all-round approach to saving, investing and actually enjoying your life. Imagine! You're on top of your monthly expenses, you’re prepared for emergencies, you’re on track to meet your financial goals… All the while enjoying the freedom to make choices that enhance your life.

You don’t have to be extremely frugal, amassing wealth at the expense of happiness. No! It's about creating a balanced approach that allows you to meet your current needs, save for unexpected expenses, invest for the future and enjoy the present.

Use 22seven to help you get there!

The 22seven app shows you all of your finances in one place. You can track your income, expenses and investments, and create a monthly budget to keep you on track. Here’s how to get started:

1. Link your accounts. Bank accounts, credit cards, loans, investments, retail accounts and even rewards. Seeing all your money stuff in one place simplifies budgeting.

2. Track your income and expenses. 22seven automatically categorises your transactions, giving you a real-time view of your income and expenses. This helps identify spending patterns and areas where you can save.

3. Make your budget. Now that you have a clear understanding of your income and expenses, you can create a budget that reflects your financial goals. Allocate funds for necessities, savings, investments and life's pleasures. Remember, each financial decision impacts others, so aim for a balanced approach.

4. Set financial goals. Whether it's building an emergency fund, saving for a dream holiday or investing for retirement, having clear objectives keeps you focused and motivated.

5. Monitor your spending. 22seven’s reporting features provide a visual representation of your income, expenses, net worth over time and other metrics. Keep an eye on your spending to ensure it aligns with your budget. Be flexible: if you overspend in one category, adjust your remaining budget for others to stay on track.

6. Review your progress regularly. The app’s tracking features allow you to monitor your progress towards your financial goals. Use it! It’s an easy way to stay motivated and you’ll quickly see if you need to make any changes to your budget or your goals. Your financial plans should be flexible and evolve as your life changes.

Final word

Financial wellness isn’t about depriving yourself. It's perfectly fine to budget for hobbies, entertainment, self-care and other activities that enhance your life, as long as these expenses are planned and you balance them with your saving and investing goals so that you have all your bases covered.

Remember, everyone’s journey to financial wellness is different. What works for one person might not work for another. If you’re unsure about your financial goals, or if you need help with budgeting, seek the assistance of a qualified financial planner. With the right tools, some patience and discipline, you’ll find the path towards financial wellness in no time!

We’ve all done it before… Going into the mall on the way home after a tough day for one little pick-me-up purchase, or impulse-buying online after an overwhelming week. What about going on an Instagram shopping binge after that same auntie asked again when you’re getting married?

But hey, this is a judgment-free zone focused on growth, so let’s not go into too many examples of emotional spending. Let’s rather look at strategies to help break the cycle.

Recognise your triggers

Start by knowing exactly which emotions, situations or events will trigger your emotional spending. These might include a boring Uber ride, lunch hour at work, anxiety-inducing activities or maybe even positive emotions like excitement or happiness.

Avoid temptation

If you know certain stores or websites trigger your emotional spending habits, try to avoid them as much as possible. Unsubscribe from email newsletters, unfollow social media accounts and find new hobbies or activities to occupy your time. Try exercising for the 20 minutes you usually spend scrolling, meditating or getting into a creative hobby. The better you know yourself, the easier this gets.

Make a budget

Are we saying a budget is the solution to most financial issues? Yes. Yes, we are. 22seven makes budgeting easy. Create one that takes your income and expenses into account and set aside a specific amount for discretionary spending. Stick to your budget as closely as possible to avoid overspending. Don’t deprive yourself of all your favourite expenses though, as this will lead to more impulse-buying in the future.

It’s okay to put away R500 to browse Takealot on a sucky Monday night if it suits your budget.

Wait before making purchases

This goes against the very nature of emotional spending. When you’re feeling down, you need a tall cappuccino and new boots immediately. But hang on: Next time you feel the urge to make an impulsive purchase, wait a day or two before buying. This way you’ll give yourself the necessary time and head space to evaluate whether that purchase is really necessary. (You can still have the cappuccino.)

Ask for help

Remember how we said in another Slice that talking about money is super important, and how it shouldn’t be taboo? If you feel like your emotional spending habits are impacting your life in a negative way, consider seeking support from a therapist or counsellor. A professional can help you work through the underlying emotional issues that might be contributing to your spending habits, and help you develop healthy coping strategies.

Remember, overcoming emotional spending is a process – it takes time and effort. Be patient with yourself and celebrate the small successes along the way!

Life is hectic and we’re faced with risks every day. Many of those risks are small, but some can be more serious. Here are five things that could happen to anybody, and how you can prepare so that they don’t impact your livelihood.

1. Losing your keys

If you’ve ever lost your house keys or car key, you’ll know what a mission it is to sort out. And it can be expensive, although household and motor insurance will usually come to the rescue. Mitigate the risk of losing your keys by putting a Bluetooth unit on your keychain (like an Apple AirTag or a Tile) so you can track your keys on your phone. As they say, prevention is better than cure. 

2. Stolen wallet

If you lose your wallet, you should immediately cancel all your bank cards. This means you need to actually know which cards are in your wallet! Make a note of them or take a photo of the inside of your wallet, and also note the cancellation numbers for all the various banks and other financial institutions. This will make it easy to cancel your cards quickly in an emergency. Don’t carry your ID card and your driver's license in the same wallet. It becomes very difficult to apply for a new driver’s licence without an ID.

3. Goodbye, phone 

Your phone holds your bank account and credit card details, e-mails, smart home apps and map apps with your favourite locations and more. Yet it only takes a second for someone to steal it. Take precautions! Use a passcode to lock your phone, or even better, fingerprint or face ID. For your transactional money apps, enable two-factor authentication. Put daily transaction limits on your bank accounts – this will limit the damage that can be done with unauthorised access. Enable ‘Find my device’ – this will allow you to locate your phone using a web browser and wipe the contents remotely. (Make sure to regularly backup your phone to a computer or the cloud.) If you run or cycle, consider taking a second phone for emergency calls and messages only, without any sensitive apps.

4. Injuring yourself

Whether you fall off your bike, slip on wet stairs or get hurt in a physical confrontation, a serious injury requires medical attention. Calling out a doctor or getting an ambulance to the hospital, along with any necessary treatment or surgery, comes at a huge cost. This is why medical aid (or medical insurance) is crucial: even the most basic plan will help to cover the costs if you’re admitted to hospital. Make sure you read your medical aid plan to see if the maximum amount of hospital cover is sufficient for you.   

5. Severe illness

It’s horrible to think about, but nobody is immune to dread diseases like cancer. Rather take steps now so that if the worst happens, you and your family are prepared. Check your medical aid policy to see which serious illnesses are covered, and to what limits. Upgrade your plan if necessary. Gap cover is another form of insurance that provides extra coverage in hospital when your medical aid cover runs out – again, check all the details. If you have a family that depends on you, it’s worth taking out a critical illness policy, which pays out a cash benefit if you get diagnosed. The money can be used to cover medical expenses, make enhancements to your home to accommodate your condition, or pay for assistance while you recover.

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