How to avoid being broke mid-month
08 May 2016
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On mobile, on digital, on demand, this is Old Mutual Live, the Money Coach edition. Hello and welcome, my name is Chris Gibbons. With me in the Old Mutual Live studio is John Manyike, Head of Financial Education at Old Mutual. John welcome, good to have you with us.
John Manyike: Thank you Chris.
CG: Now, here’s a problem. I do not earn a large sum of money, I am quite careful, I’m not one of those payday millionaires you talked about in an earlier episode. But John, it doesn’t seem to matter what I do, by the middle of the month, I am broke. I’m skit, there’s nothing left.
There just doesn’t seem to be enough to get to the next payday. Of course, as we all know, that’s where the lenders come into play. That’s why in this edition of Old Mutual Live Money Coach, we’re going to be looking at how to avoid being broke in the middle of the month. John Manyike, where do we start?
Get your mind-set right first
JM: I think one of the challenges that I experience with people who get broke in the middle of the month is because of not having the right mind-set. I think we need to begin there. I know I’m immediately going into solution mode here, but sometimes just get right into it. Having the right mind-set means you need to actually have a financial vision.
Because if you don’t have a financial vision and goals, you will just be spending your money aimlessly. Because you’re not aiming and you’re not targeting anything. You’re not working towards any specific goal and so on. Therefore, wealth creation is actually a distant thing to you. I think the first thing, we just need to deal with that, make sure you have the right mind-set.
CG: My mind-set, my goal is just to get through the money, put food on the table. The reality is, I don’t seem to have enough money coming in versus what needs to go out.
JM: I think that’s where the problem starts. Because as long as you have not put a stake on the ground that says, by the end of the year, my goal is to pay off all my debts, as an example; or my goal is to save a deposit for a house or to make alterations in the house or to buy a car. Whatever the case may be, you’re not going to know where your money is going.
Then, of course, it goes hand in hand with having to track where your money goes. If you don’t know where your money goes, your money will continue to go down the drain. You need to actually track it down, do a bit of analysis and review your expenses. Track where you’re spending most of your money.
Dealing with being caught between a rock and a hard place
CG: Again, it’s easy for you to sit there and say that. But for many of us, on the one side there’s extended family who have needs. Needs, not wants, needs, they have real needs. On the other I’ve got kids who also have needs, I’m caught in the middle.
JM: Quite true, we also do have what we call the sandwich generation. The sandwich generation are people who are trapped between having to provide for their parents as well as their extended family as well as their children. With one income, having to provide for everybody, including yourself, your own needs, including the need to be able to get yourself to work and so on, it can be quite a challenging thing.
CG: How do I deal with that?
JM: I think firstly it’s important that one takes the family into confidence. Be very clear in terms of what you are able to do. What you’re not able to do because sometimes we tend to have this guilt that if I say I cannot assist, they’ll think no, I’m not supportive and so on. It happens, especially among black people where you’ll find that you’re one of the few people in the family who has furthered their studies. You’ve got some degree and you’ve got a good job and everybody looks up to you.
CG: You feel the obligations.
JM: You feel the obligation that people, there are a lot of people within the family who helped me and supported me towards my career. But it doesn’t mean that you must give something you don’t have. You can’t give what you don’t have.
Learn to say no
CG: Are you saying I have to learn to say no?
JM: You must also learn to say no, where you cannot. Like I said, you cannot give what you don’t have. Take your family into confidence and be clear in terms of what you can and you cannot do. If you don’t have the money, you don’t have the money, that’s the point.
CG: But isn’t there a danger that I make my problem their problem?
JM: Well, it’s actually the other way around in a sense. Yes, people might have helped you, but it means you have to be very realistic in terms of, especially when you also have obligations. Say for the education of your children. The danger here is that if you have a family that is trying to intercept the cycle of generational poverty, there’s no way you can escape that.
Unless at some point you empower your children and improve the prospects of them acquiring a degree. Because the prospects of finding employment are much better compared to a person who did not go far in terms of schooling.
Empower yourself – not the lenders
CG: So, I hit the middle of the month, the temptation is of course, to head off to the money lenders. They know I have accounts to pay, they know I have people who need food, they take advantage of that.
JM: Yes, it’s true, because this is why we hear of payday loans, people actually get a loan on payday. You wonder, how do you borrow money on payday. It’s because already you know that whatever you’re going to earn. It’s not going to sustain you throughout the month. The problem there is that that cycle needs to be broken at some point.
If you’re going to keep going back to these payday loans, it’s not going to happen. Maybe you might want to have a look at all your debts and say, is there a way I can consolidate all my debts? If you’ve got too much debt and if there’s merit to it and you can afford to consolidate your debt, consult a financial provider who can do that.
CG: Talk to a debt counsellor?
JM: That’s another option, you could also talk to a debt counsellor, if you’re over-indebted. They will assess the situation. If you’re over-indebted and you qualify. They might as well make arrangements on your behalf with different creditors. But it also means that you cannot apply for new credit.
CG: I think that’s going to have to be a completely different episode of Old Mutual Live Money Coach, how to get out of debt, debt consolidation and so on and so forth. All right, so let’s recap, you’re listening to Old Mutual Live, the Money Coach edition, on demand, visit, dogreatthings.co.za. John, what are the key things to remember about not going broke in mid-month?
Important things to remember
JM: It’s having the right mind-set, making sure that you have a financial vision that’s backed by goals. Whether it’s short, medium to long term and stick to that. You need to be very disciplined in that. Having to track your budgets, live within your means. Track your budget, check where you’re spending your money.
In some instances, if you need to downgrade certain things, downgrade, to make sure that you avoid being broke in the middle of the month. Avoid getting yourself into rotational credit, revolving credit to sustain yourself throughout the month.
CG: This has been another edition of Old Mutual Live, the Money Coach edition, my name is Chris Gibbons. With me in the Money Coach studio has been John Manyike, Head of Financial Education at Old Mutual. John, if the listeners want more information, where should they go?
JM: They can join our digital community on Facebook and there they’ll find us at On the Money Financial Education Programme or follow us on Twitter, which is @OM_OnTheMoney. They can even enrol for an online course on www.omonthemoney.co.za and learn more about how to manage money through that course.
CG: John, thank you for that, get in touch any time, if you have any questions, for either John or myself, any topics you’d like us to cover. Anything you’d like us to discuss here on Old Mutual Live Money Coach, please feel free to send them direct to me at firstname.lastname@example.org. John and I would be delighted to hear from you. Old Mutual Live, on mobile, on digital, on demand.