Thread by @ZithobileNcapai

I turned 30 on the 28th of Feb and this year I decided to celebrate my Birthday differently. Here are the 30 financial ideas I learnt along the way that shaped and continue to shape my life as I journey for my Financial Freedom. A thread

#FinancialHealth2020
#FinancialFreedom

1. BUDGET! BUDGET!
This is the best way to keep track of your CashFlows. Technology has made life easy: you can find it in most Financial Apps or Google the template & create one for yourself. Always remember that you spend what is left after Savings, not the other way round

2. Be very realistic with your expenses, don’t under or over allocate funds to them. If you not sure how much you need for a certain expense, give yourself 3 months to track your spending then after you should have a figure to put down.

3. Budget monthly for every expense you’re aware of including your annual once-off expenses like December costs, Traveling & Entertainment. If it means that you need to put this money in a separate account/s, do so by opening linked Savings account to your main bank account

4. PAY YOURSELF FIRST
Make no mistake, this does not refer to the money u spent while spoiling yourself (that should be catered for under Entertainment in ur expenses), it simple means that u must save/invest at least 10% of ur Total income every month, before paying ur expenses

5. PAY YOURSELF FIRST
Invest in yourself! I dare you to go for that course u always wanted to do, read books that will increase ur financial literacy e.g The Richest Man in Babylon, The Millionaire next door etc. Follow Personal Finance Enthusiasts like @ImcocoMash 👌❤

6. (a) SAVINGS & INVESTMENTS
Firstly, you need to set up an Emergency Fund for unforeseen expenses that equals to atleast 3 months of ur Total Expenses & from there continue to save every month on it even if its just a R200 (for inflation).

6 (b) SAVINGS & INVESTMENTS
Put your Emergency Fund in a high interest bearing Savings Account OR if you've an access bond and it's charging you high interest rate compared to the interest rate that the savings account offers to you, use your access bond to save for your E. Fund

7. It is very important to define what Emergency means in your life. Learn to say NO to yourself and to everyone who wants you to tap on your Emergency Fund for a non-emergency expense.

8(a) Once your E. Fund is up & running, the first important investment u need to put in place or supplement is ur Retirement Fund. Almost all Banks & Asset Management Companies in SA offer a TAX-FREE savings/investment accounts. Take advantage of this and invest for your future!

8(b) Before you invest your money in any type of Investment, do your own research & choose the one that speaks to you, your goals and your risk appetite.

9(a) Again, take advantage of Tax-Free Accounts! But, always keep in mind the ff:
1. U can invest in many different Tax Free Investments Accounts with many different companies
2. The threshold is R500k over lifetime, R36k Annually & i.e R3k a month across all ur Tax Free accounts

9(b) Also, with TFSA learn to invest & keep ur money there for long term because every time u invest in a tax-free account the above set values decrease (esp R500k-lifetime). So, when you withdraw that money prematurely you're actually losing on big tax benefits in the long term

10. Build a well-diversified investment Portfolio. Depending on your interests and risk appetite, u can invest in many different asset types that will give u returns in the future: 1 Shares *Tax-Free* (Individual Company Shares, ETF’s, Unit Trust) 2 Bonds 3 Property 4 Livestock

11. ADDITIONAL INCOME
There're 2 types of incomes - Active & Passive. Active Incomes: it's ways of generating wealth wt active participation, when a person stops being active on it - the income also stops generating e.g 1 Salary-from working 2. Profit Income-from buying & selling

12(a). ADDITIONAL INCOME
Passive Income: Refers to ways of generating wealth without active participation e.g

1. Rental income (Income from renting a property, product & service)
2. Dividend income (Income from owning stocks)
3. Capital Gains (Assets increasing in value)

12(b) ADDITIONAL INCOME

4. Royalty income (Income from others using your idea e.g selling a book or music)
5. Rights income (By selling rights on certain Intellectual Property)
6. Replication (This is when you multiply your earnings on any of the above income streams).

12(c) ADDITIONAL INCOME

Get yourself as many Passive Incomes as you possible can‼

13. OBLIGATIONS

Stay away from Unsecured Loans, the likes of Personal Loans, Credit Cards, Overdrafts, Store Accounts etc. – simple because their exorbitant interest rates steals directly from your future (opportunity cost***)

14. OBLIGATIONS

If you happen to have a few unsecured loans in place already, pay them off as quick as possible (use the snowball method – it works like a charm) in order to free some funds for yourself and use those funds to better your life or invest them for your future

15. OBLIGATIONS
House Loan: The system qualifies u for a Bond amount that equals to 30% of ur monthly Gross Salary e.g if u earn R20 000 a month, the system allows u to buy a House that costs up to R600 000 (Banks will still run their assessment on affordability & credit profile)

15(b) Always and I mean always go for a house that costs less than that 30% of your monthly Salary (same applies to renting) so that you can be less committed and be able to breathe financially.

16. House: Always pay extra to your Access Bond account inorder to kill interest rate and eventually pay it off quicker. The goal should be to get your Property fully paid up in less than 10 years as opposed to the 20 or 30 years period that the bank gives you.

17. Car: The value of your car should never exceed your Annual Gross Salary. Never accept Balloon payment – it’s a trap! I had someone who tried to explain it’s good side to me and still I was not sold, coz to me all it simple means is that you don’t afford that car.

18. Car: Like on property, always pay more than your monthly instalment even if it’s just a R200 extra – it makes huge savings on interest rates, and in this way you should be able to pay off your car within 4 years.

19. Insurance: Please make sure that you insure everything that you cant afford to lose in your life including your life and that of your loved ones whom you're responsible for. The trick here is to make sure that you are not under or over insured.

20. Cell phone: Always try to buy it on prepaid as opposed to contract, because the contracts are not designed to favor you the consumer more than they favor the service provider … and make sure that the value of your phone is not higher than your monthly Net Salary.

21(a). COMPOUND INTEREST

Understanding how compound interest works on both Credit and Savings is the best education you can give yourself, and learning how to take advantage of it has to be the greatest thing you can ever do for your Future.

21(b). COMPOUND INTEREST

On credit – always pay extra every month.
On Savings – learn to invest and keep your money there on a long term basis!

22. CREDIT REPORT

It’s unfortunate that debt is one of the elements that helps build up a good credit score. So one needs 1 small credit obligation in place, pay it every month & on time, then keep it open for some time or until u buy yourself a big purchase like a House or Car

23. Make sure that u check ur credit score often & use their recommendations to improve it. The likes of Experian, Transunion – offers it for free once a year & Clearscore & many other Apps offers it for free once a month - get urs & be up to date about your credit report

24. “Black listed”/ Bad or low credit score/ Administration/ Debt review? Don’t stress your credit profile is repairable over time, just fix your finances by settling all your debts and never fall for that trap again!

25. Having a good credit score in place gives u leverage to negotiate or renegotiate interest rates for any & I mean any secured loan u get into with a Bank or Financial Institution e.g Home loan or Car Finance. So, it's very important to get yourself one & keep building it!

26. Always remember that when you take a secured loan from a Bank or Financial Institution - they are not doing u any favors, instead u’re the one who is giving them business. So, never settle for the first interest rate they give u - shop around, negotiate & take the lowest.

27. MONEY PERSONALITY

It is very important to understand your money personality or your relationship with money, so that you can be able to put in place secured measures to prevent yourself from any impulsive spending

28. LIFESTYLE INFLATION

Avoid increasing your expenses as your income increases at all cost! When you get a salary increase from work that must mean that you have more disposable income to save and invest, not to spend.

29. If you’re lucky enough to receive Annual Bonuses, to see its actual value in your life – use it to increase your Net Worth – e.g pay off your debt/s, increase your Emergency Fund, add another income stream/s or Invest it in your preferred Asset/s

30(a). BLACK TAX

Or whatever name you feel comfortable with, bottom line is that it is part of our lives especially most black SAns. So, one needs to be very strategic about it and find financial healthy ways that'll work for all parties involved.

30 (b). BLACK TAX
Don’t run away from it bcoz as u grow so are your commitments & Black Tax doesn't just disappear in the thin air - someone needs to step in & assume responsibility. With that being said, never allow it to consume u!

(My upcoming Book will cover this in full)

If I were to summarize the 30 Financial Ideas I just shared I'd say - Any1 with an income can save! & with saving, it is not how much u earn, but how much u keep! Always remember to pay urself first i.e spend what is left after saving & avoid bad debts/unsecured loans at all cost