Romana Peters

Dear AFETT,

I have been feeling a bit stressed lately, especially when it comes to managing my finances. I've worked hard to get where I am in my career, but when it comes to money, I feel a bit lost.

I realise there's so much I don't know about handling money. Can you advise me on how to start taking control of my finances without feeling overwhelmed?

Dear Maria,

I completely understand where you're coming from.

Managing finances can feel like navigating a maze sometimes, especially when you are juggling a demanding career. But don't worry, you're not alone in feeling this way.

Allow me to share some insightful tips on taking control of your finances without the overwhelming feeling.

Amidst the myriad of financial data, there exists a plethora of information often overlooked or concealed within the folds of our financial lives. This raises a pertinent question: Where do we stand?

At the heart of financial literacy and education lies a pivotal concept – financial awareness. It's not about being encyclopaedic about every nuance of finance, but rather, being cognisant of what we know and what we don't. Ignorance, after all, begets another layer of uncertainty. Yet in acknowledging our knowledge gaps, we uncover the pathways to enlightenment.

Financial literacy transcends the rudiments of budgeting, savings and investing.

While these fundamentals are crucial, I aim to shed light on concealed or disregarded financial wisdom, empowering you on your financial journey.

Automatic savings: A paradigm shift

In an event I attended recently, in a room of 52 people aged 29-45, I posed a simple query: How many of you save?

Astonishingly, only half raised their hands. Delving deeper, I discovered that a mere fraction had embraced the concept of automatic savings.

Despite the prevalence of automatic deductions for taxes, loans and other obligations, setting up an automatic savings plan remains a distant aspiration for many.

The prevailing misconception? That significant sums are requisite for recurring deposits.

However, from my research, a mere one in every 22 savers had an automatic savings plan. It's a stark realisation that demands immediate rectification.

There is an urgent need to bridge the gap between intention and action. An automatic savings plan not only streamlines the process of saving but also cultivates a disciplined savings habit.

Moreover, certain financial institutions incentivise such behaviour by offering bonus interest for consistent deposits and savings patterns, providing an additional impetus for adopting this prudent financial practice.

Create an emergency fund

An emergency fund is not akin to a regular savings account. Rather, it serves as a financial cushion against unforeseen circumstances such as medical emergencies, job loss or unexpected repairs.

Establishing this fund necessitates a behavioural shift, gradually accumulating savings to cover three-six months' worth of expenses.

Think of it as your personal insurance policy – a shield again