Working hard for your money needs careful consideration over how to use your income effectively. If you allocate your finances carefully, you will ensure that you’re living within your means and not above them.
Let’s face it, the worst is still to come as statements are arriving at the end of the month says certified Financial Planner Paul Roelofse.
It’s not about the amount of money you earn, it’s about how you use it.— Paul Roelofse, certified financial planner
Roelofse says that you have to get down to measuring your finances so you can manage it. He adds that you have to be able to allocate your income wisely, on a piece of paper, so you can see where your money is going.
I’ve got a very simple formula to understand where the right amounts should go says Roelofse, it’s called the 30/30/40 rule.
Roelofse says that 30% of your income, regardless of how much you earn, should go to future provisions like medical aid, savings, and pensions.
It caters for financial independence, it caters for unforeseen expenses, if you have an accident you have some insurance in place.— Paul Roelofse, certified financial planner
Roelofse adds that you shouldn’t go any further than 30% when it comes to debt. He says that this includes the car that you drive, the house that you live in and any other financial debts.
We should really take charge of our own debt.— Paul Roelofse, certified financial planner
At this point in time, you’re financially comfortable because you have secured your provisions and your debts says Roelofse. He adds that the balance of 40% of your income should be used to live on during the month.
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