In the fast-paced, complicated, and stressful world of finance, emotions often take the driver’s seat, we need to protect our hard-earned money and maximise its potential for long-term success.
We’ve all witnessed these moments. People squander their 13th cheques, annual bonuses, tax pay outs, annual increases, lottery winnings, insurance pay-outs, inheritances, RAF claims, and more. These moments are not as rare as you think. They can happen to anyone; however, the key lies in how we navigate these unexpected opportunities.
In the absence of knowledge and experience, emotional and irrational decisions can lead to long-term financial detriment. As consumers, we need to take a step back, assess our financial landscape, and invest the time needed to secure a stable financial future.
Chief Marketing Officer at Momentum Money, Cebile Zibi unpacks the emotional pitfalls of a sudden influx of income and explains how best to avoid them
“When it comes to money, it’s often said that ‘a wise person should have money in their head, but not in their heart’. If we had to rank the most emotional conversations in our lives, I can bet money ranks pretty high on that list for most of us. Our emotions can too often get the better of us, especially when it comes to spending.”
“What we want money for and what we need it for don’t always see eye to eye. So, when we receive an unexpected financial windfall like an inheritance or a bonus – too many of us immediately plot out how to spend it all. If you’ve ever caught an episode of the show ‘I blew it’, you’ll know how easy it is to throw money down the drain through frivolous spending. Even in America, stats from the National Endowment for Financial Education reveal that 70% of lottery winners either end up broke within the first few years or some even declare bankruptcy.”
“We’ve all witnessed these moments. People squander their 13th cheques, annual bonuses, tax pay outs, annual increases, lottery winnings, insurance pay-outs, inheritances, RAF claims, and more. These moments are not as rare as you think. They can happen to anyone; however, the key lies in how we navigate these unexpected opportunities.” she adds.
“When faced with more money than we are accustomed to handling, it’s too easy to be tempted by impulsive decisions and emotional spending. This is precisely why it is critical that we empower South Africans to make thoughtful financial choices that pave the way for their journey to success.”
“In the fast-paced, complicated, and stressful world of finance, emotions often take the driver’s seat, we need to protect our hard-earned money and maximise its potential for long-term success.”
“At Momentum Money they say, ‘Don’t Blow It, Grow It’. This is more than just a slogan; it’s a call to action for South Africans to break free from impulsive reactions and embrace a mindset focused on strategic financial planning. But as individuals, we must all acknowledge that how we handle our money today is indicative of our ability to manage larger sums in the future.”
“In the absence of knowledge and experience, emotional and irrational decisions can lead to long-term financial detriment. As consumers, we need to take a step back, assess our financial landscape, and invest the time needed to secure a stable financial future. A large sum of money suddenly injected into our bank accounts can do a world of good for our financial future.”
If you can resist the urge to splurge your new-found wealth, then Zibi urges you to consider the following in your head with these money savvy decisions:
1. Pause and reflect
Before you do anything rash, the best thing you can do is take a time out, pause, and reflect on what you can do with your money. In the meantime, put it in a digital savings account that can generate interest and grow the money. The Momentum Money Digital Savings Account is the perfect example of this.
2. Establish clear goals
Before embarking on any financial venture, set clear and realistic goals. Whether it’s paying off debts, investing for the future, or creating an emergency fund, having well-defined objectives helps guide your financial decisions.
3. Tap into the right advice
Engaging with a financial adviser can provide valuable insights tailored to your unique circumstances. Their expertise can assist you in making informed decisions, optimising your wealth for long-term growth.
4. Emergency fund
Before delving into significant financial commitments, prioritise building an emergency fund. This safety net ensures you’re prepared for unexpected expenses, safeguarding your overall financial stability.
5. Debt management
If you have outstanding debts, consider allocating a portion of your windfall to debt reduction. Reducing high-interest debts can significantly improve your overall financial health and increase your capacity to invest for the future.
6. Don’t blow it, grow it!
As you think to yourself about your money and what you plan to do with it, remember, it’s not just about numbers; it’s about dreams, aspirations, and a lasting legacy that you want to leave behind.
“Sometimes you only get one chance to seize an opportunity and set your life on the path to success. So, I’ll say it again – don’t blow it, grow it! Your future is in your hands, so pause and reflect, have the right conversations, be honest with yourself, don’t spend with your heart, and you should be well on your way to a money-smart future.” says Zibi.
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