Stephen's Blog : financial planning

Steve's blog: When do you pay your bills?

Stephen Nel — Mon, 15 Feb 2010 16:09:00 GMT

Ah, bills. Those little envelopes with panelled windows arriving in the post that don’t offer the start of a pleasant conversation but rather a reminder that our resources have, for some reason or another, been committed to someone else this month. And the next and the next, in many cases. What do you do with them when they land in your “inbox”? There are a number of ways to approach this, from dealing with them immediately, to some kind of scheduled payment, to conveniently forgetting about them until they come marked with an angry red stamp. I’d like to suggest, for a number of reasons, that you should pay them as they arrive.

In making this suggestion, I’m basing it on the premise that money management is more about the mind than it is about the maths. From a purely mathematical point of view, it makes sense to delay payment as long as possible, thereby earning as much interest as possible on your money before handing it over. Many large corporations contribute some fairly substantial amounts to their bottom line in this way – get your goods in from suppliers, pocket the cash from your customers and then hang on to it as long as possible before handing over what you need to. Truth be told, though, you need to be talking about very large sums of money for this to make an appreciable difference and this just doesn’t apply to the vast majority of us. In most cases, we’re left weighing a few rands and cents against the possible advantages of more immediate payment.

It’s worth noting also that this applies mostly to those “occasional” bills: your regular ones like the mortgage payment, insurance premiums, vehicle repayments and communications bills are usually taken care of by debit orders passing through on specified days. Make this as close to payday as possible to avoid any situations not having funds available when payments are due – especially something you don’t want to do on insurance payments!

The first advantage, and one I value highly, is that it reduces stress and introduces certainty. Delaying payment on the bills means that they sit in your mind, consciously or unconsciously, and the fact that they haven’t been dealt with introduces stress. This can be avoided by paying them as they come in – something that is impliedly encouraged by good personal time management systems, which often encourage one to do right away anything that takes a few minutes or less. I find that paying bills (though not a fun activity!) fits into that category 90% of the time. It also means you get an additional benefit of time saving because you don’t have to set aside a large chunk of your day to process a whole lot of bills at once.

Secondly, it can actually save money much of the time. I’ve noticed that many times there are opportunities to obtain a discount if you pay immediately – either built in or negotiated – and these can add up to at least the amount you gain interest wise in holding onto the money. And, if I’m honest, I know there have been those times where a bill has slipped my mind completely and I’ve ended up paying more than the initial amount for one reason or another. Paying the bills as I receive them ensures this never happens.

Thirdly, it helps you manage money better because you’re more aware of what you actually have. The healthier bank balance that you invariably have by delaying payment can be misleading and could tempt you into spending money (that you don’t really have) on yourself before anything else. A more sobering view, conversely, could also lead to better habits – maybe you’ll be tempted rather to save and invest when you know that you don’t actually have enough for that nice new TV you’ve been eyeing!

Much of the above comes about from learning the hard way, but you'll find the sentiment repeated on many personal finance sites (like Get Rich Slowly, for example) and the point ultimately made is a good one: effective personal financial management is merely a collection of small but good habits.

When the tinsel's gone

Stephen Nel — Thu, 31 Dec 2009 08:58:00 GMT

It’s the turning of the year again, with everyone looking back on what’s been before and looking to what is coming ahead. The first few days of the New Year will be awash with hazy memories of indulgences as we tidy away the remnants of the parties and occasions that prompted them. The last thing that anyone really feels like doing at this time is attending to financial management, but perhaps that’s not a bad thing. This is not traditionally a time for looking after details, so why not carry that through to your financial thoughts and focus on something a little bigger than scratching out your expenses in whatever tool you use?

Most of all, I think this time could be used in reflecting on who you want to be. All that meaning of life stuff, you know. Whether we think so or not, each of us already has a framework for how we understand life and a picture of who we want to be; the question is whether or not we are conscious of it. Steven Covey, in his book 7 Habits of Highly Effective People, calls this habit 2 – beginning with the end in mind (definitely worth a read or a re-read). It’s about more than simply setting a goal and working out how to achieve it, it’s consciously setting a filter in place that will help inform every decision you take in every area of your life and that will help harmonise those decisions to maintain a consistent worldview. Do you believe fundamentally that life is not about yourself, or that it’s actually every man for himself? Do you see yourself as a family person? A supporter of the community? A technical expert who’s going to be the best in their field? Settling these questions provides clarity for everything, and inevitably trickles down into how you decide to run your personal finances.

Though vitally important, I’ve realised the hard way that it’s not enough, of course, to stop at this understanding of myself and how it will shape my actions over the next year. I also need to decide what to do about it.

As far as thinking about what you want to do with your finances is concerned, I’ve been reading David Allen’s book Getting things done (also worth a read) and he has a few ideas which could be useful. Most notably, it might be an idea to think of your finances as a project. If you were to follow Allen’s methodology, this would mean applying five principles to it, in this order: understand and clarify why you want to do it, envisage what a successful outcome would look like, brainstorm ideas of how to do it, organise what your actions are going to be and then, finally, do them. For ideas on fleshing out this framework, this site is full of good ideas and it’s worth a quick browse to find things that will work for you. The beginning of the year is usually the time when we have the most energy and enthusiasm for starting something new, so it’s best to make sure that it’s practical enough for us to want to continue with it through the year.

We seem to be built, as humans, to need to take a break every now and then, so it’s no bad thing to apply this to the humdrum aspects of personal financial management; well utilised, though, it can also help propel us forward. All that really remains to be said is to wish everyone reading this all the very best for 2010. May you be able to look back on it this time next year and realise that circumstances have combined with your well-thought efforts to leave you in a better position than the one you are in now.

Steve's blog: When sharks prey

Stephen Nel — Thu, 10 Dec 2009 07:53:00 GMT

The sometimes turbulent waters of money lending definitely get murkier as you go further down and the chances of coming across less than savoury characters increase as well. The problem of unscrupulous moneylenders taking advantage of the weakness or desperate need of people was recognised even before the introduction of the National Credit Act, but the attempts at fixing the problem from a regulatory perspective were only really escalated to national prominence with the introduction of that Act in 2006. So what is the current situation when looking at the problem of over indebted consumers?

The problem is, of course, still very much a current one. I’ve been involved in the financial services industry for many years and remember coming across situations in the 1990s where, after deduction of loan instalments from their salary, people would take home less than R100 a month. How could anyone live on that? While you thankfully don’t really come across that anymore, I still come across some questionable situations. By way of example, I know of a domestic worker who was granted credit by a furniture store to buy a bedroom suite for over R6,000 (with repayments of over R400 per month) on a salary of R2,500. I wince at the thought of getting credit for almost 2.5x my salary for something like that and really don’t know how she’s going to manage. Is that responsible lending?

The NCA has some fairly strong provisions when it comes to dealing with the granting of credit recklessly. It states in section 80 that a credit agreement will be reckless if, at the time that it was made, the credit provider either didn’t conduct the required assessment of the consumer or, after doing so, granted the credit even though it would result in the consumer becoming over-indebted. The definition of when a consumer is over-indebted is in turn fairly broad: this happens when they are unable to meet all their obligations under their credit agreements taking into account their financial means and their history of repayment. In a nutshell, if you’re granted a loan or credit where there was no proper assessment or that results in you becoming unable to repay all your obligations, the agreement runs the risk of being declared reckless.

Just to ensure that credit providers are deterred from making these kind of agreements, the NCA goes on in section 83 to say that, where there was no proper assessment or where it was clear that the consumer didn’t appreciate their costs, risks or obligations under the agreement, the court can make an order setting aside all or part of the consumer’s obligations. It may also, as with the case where it finds that the lending made the consumer over-indebted, suspend the agreement for as long as it sees fit, during which time no interest may be charged or any claim for payment made. Potentially harsh provisions, to be sure, but made to curb some harsh practices.

So what does one do if you, or someone you know, seems to be over-indebted or has fallen victim to an unscrupulous credit provider? My first suggestion would be to call the offices of the National Credit Regulator on 0860 627 627 (they also have a helpful website) and they should be able to point you towards authentic debt counselling or other avenues that would give you fuller legal advice, helping you to exercise your rights under the NCA.

Of course, it’s not really enough just to know your rights and remedies: prevention is better than cure, so you should always do your best to avoid getting into these situations in the first place. As has been said many times on this site, don’t take up credit just because you think you can and don’t take it up for things like luxury goods (a broader definition than you might think!) or daily living expenses. Then, if you must, go to a reputable and established credit provider. And, if your application for credit is rejected by them, for goodness’ sake don’t continue hunting until you find someone who will lend you the money: there’s a reason they don’t think you’ll manage the payments and you need to take heed. The best way to avoid falling prey to sharks is not to go swimming with them in the first place.

Steve's Blog - I know what you borrowed last summer

Stephen Nel — Thu, 19 Nov 2009 05:13:00 GMT

When the National Credit Act (NCA) was still in draft form, I attended some of the parliamentary discussions where industry participants were given a chance to express some of their concerns about the legislation. This wasn't a one way street, and the committee members showed no hesitation in expressing their thoughts about the industry participants! While banks in general got a fairly frosty reception, it was nothing compared to what was said to credit bureaus – nothing but hostility there! Everyone was all too aware of the impact that these institutions could have on one’s plans, and it’s no less so now that the NCA regulates much of the way that they operate with regard to your credit record. A few thoughts on your rights might be in order, then.

Though credit bureaus are often seen as a bad thing by consumers – especially those with poor credit records – they have an important role to play. Any lending institution has to charge for its loans in part according to the risk that it sees in a transaction, and having the right information available helps it to get to the most appropriate interest rate for a particular individual. The better the credit record, the better the pricing, the worse the record, the worse the pricing. Without specific information, good payers would end up paying more than they had to, as lenders would need to take an unnecessarily conservative view to avoid losses from defaults.

That said, the NCA recognises that things must be done correctly at the bureaus because of the prejudice that an incorrect report could cause. So, as already pointed out on HCWHY in this article, there are a number of ways in which you, the consumer, are protected. To quote a few examples from the article and the NCA:

a credit bureau must take reasonable steps to verify the accuracy of any consumer credit information submitted to it;
a credit bureau may not allow any negative inference about a person’s creditworthiness merely on the basis that the person has no consumer credit information about that person;
a credit bureau may not knowingly or negligently provide a report containing inaccurate information;
every person has the right to be advised by a credit provider before any adverse information is reported to a credit bureau;
every person has the right to challenge the information and require an investigation without charge – during which time the information may not be reported; and
every person has the right to access his or her information at any time on payment of a fee or without charge once every twelve months.

Obviously these rights are a good thing for the consumer. While some of these rights operate independently of any action you take (e.g. the bureau’s obligation to take reasonable steps to make sure the information is accurate), you need to take advantage of others actively – like the right to access the information. It’s a good idea to do this at least once a year, both to make sure that the information they’re holding on you is accurate and also to use as a tool to make sure you’re maintaining your own financial health properly. If your credit record is good, congratulations – keep it that way. If not – after you’ve got over the shock, make that information one of the first things you take into account when working out your plan for attaining financial freedom.

So how do you take advantage of your right to access information? Thanks to the marvel of the internet, it’s relatively simple. Transunion (ITC), for example, has a dedicated website at this link that allows you to take up various options from paid monthly subscriptions to a free credit report. The other major credit bureau, Experian, has a similar site here. You’ll have to register on the sites and possibly provide some additional personal information before being able to access the report, but it’s a relatively simple and painless procedure. Do it, and you’ll be much better equipped to know the outcome of any credit application you may have to make.

In short, the thought of your credit record no longer needs to give you sleepless nights. You’re protected by credit bureaus being required to act responsibly, by your having additional rights to challenge information and by being able to access your records at any time. As with all matters of personal finance, the worst thing is for you to do nothing. Check your record now and make sure you’re staying on track.

Steve’s Blog – How much is too little?

Stephen Nel — Thu, 29 Oct 2009 05:07:00 GMT

It’s not uncommon to hear people asking “How much is enough?” when thinking about their financial status and the prospect of what they can achieve once they’ve got things under control. Lately, though, I’ve been wondering if it wouldn’t be good also to ask “How much is too little?” After all, it seems to me that real financial freedom is about more than just good money management: it should be part of a greater freedom to pursue things that you feel really matter.

I suspect that we inevitably set our sights too high when considering this question and thinking about the things we own, or want to own. A more sobering view is to consider the work that’s been done in this country to try to determine poverty levels, a relevant issue when trying to debate matters such as basic income grants. In a discussion paper published in 2007, Treasury SA considered the question of a poverty line and how one might arrive at a meaningful figure. In trying to get there, they worked with the amount required to purchase food to satisfy a daily energy requirement of 2261 kilocalories and then added on top amounts to cater for things like accommodation, electricity, transport and medical costs in a household. The final figure that they arrived at? In 2006 prices, it was just R431 per person per month – let’s say around R570 per month now.

R570 per month. That’s quite a thought for those of us whose property levy amounts to more than that every month, but it’s certainly a different perspective on things. Certainly you need to have the basics of life covered before considering anything else – theories like Maslow’s Hierarchy of Needs testify to that – but if this is a viable figure to ensure survival (let’s not talk about the actual quality of survival for a minute), then is everything else beyond that just a luxury? Does one man’s R1,2m BMW (sorry, Trevor) become another man’s Honda? I’ll be the first to admit that the choice of any particular standard of living is a personal one and varies widely from person to person, but my point is that, if the vast majority of people visiting this site are completely honest, it’s actually more about comfort than survival. Not that R570 per month is a target to aim for, but it indicates you can get by on a lot less than you think.

I’d suggest that it’s important to look at things with this kind of perspective from time to time because life really is about more than the relentless pursuit of material acquisitions – look at Attie’s posts on Money and Happiness to see how this plays out, for example. It feels so easy, though, to get stuck on the hamster wheel of reaching for an ever higher living standard just because everyone else is doing it or because we “need” to do so. Then, before we realise it, we’re caught in situations and jobs we don’t really enjoy because we’re either paying off debt we acquired to finance our lifestyle or (if our money management is really good) frantically saving to be able to afford the next purchase.

What would our lives look like if we rethought our views on how much was too little? Would we pursue something that we shy away from because we “couldn’t survive” on how much we might earn from it? Would we take more chances to pursue dreams rather than careers? Might we find more space to be as altruistic as we fondly imagine ourselves to be? I honestly don’t know what the answers would be, but the questions that the different perspective brings have certainly given food for thought.

Steve’s blog – the Psychology of Now

Stephen Nel — Tue, 13 Oct 2009 10:18:00 GMT

“I want it all / And I want it now!” Queen’s rock anthem from the late 80’s summed up much of the mood of the decade – remember how everyone wanted to be a yuppie? Flashy cars, new houses and shiny clothes? While the song has faded, though, there’s still a lot of the sentiment around. I think it’s worth looking at how much it applies to us, because at the end of the day effective money management is more about our minds than it is about our maths.

The psychology of now tells us that whatever we want, we need to get immediately. If we see something we like, we use whatever means we have to acquire it without having to wait, so that we can enjoy it at once. Our gratification must be instant! The problem is that it’s all too tempting to do so without looking at the cost of those means, especially where it involves borrowing, and that’s where we frequently find ourselves in difficulty a little further down the line. "Buy now, pay later" has meaning on more than one level, if you think about it.

In the famous “Marshmallow Experiment”, the Stanford University psychologist, Walter Mischel, gave groups of four year old children a marshmallow each, promising that he would give them a second if they would postpone eating it until he came back after leaving the room. The reaction of the children varied: some wolfed down the single marshmallow immediately, others tried for a while but then gave up and still others waited determinedly for his return (distracting themselves with various techniques) and earned the second marshmallow. Mischel followed up his studies 12-14 years later and found that those children who had waited for the second marshmallow were more resilient, socially competent and self confident and even scored higher on their academic tests. The ability to delay gratification was a powerful indicator of later success in life.

I think that the results of this experiment have a lot to say about our ability to secure our financial freedom. Every time go into debt as a result of giving in to the temptation of having something now we dig the hole a little deeper. The irony is that all we’re talking about is delayed gratification, not cancelled gratification, and even then it's only an initial delay. By way of example, most of us are used to changing cars every four or five years but we do so on credit and face a never ending cycle of payments to a financier. However, if we delayed the purchase of a new car and saved the equal payment for a period of four or five years, not only would we be able to buy for cash and save about 40% on the price but by maintaining the “payment” to ourselves, we’d be in exactly the same situation as those who are on the replace/finance treadmill – only without the worry.

We all have temptations and weaknesses and we can’t expect the sellers of things to avoid them. After all, they have a business to run and if they can move their goods by offering a credit line then they will. It’s up to us to come up with ways to deal with the temptations and weaknesses – distraction, avoiding situations and advertising we know will get to us or just educating ourselves. I’m open to any and all suggestions myself! It’s not an easy thing to do because the odds are deliberately stacked against you in so many ways, but the benefits of learning this trick, of overcoming the psychology of now, will result in many long term rewards and some significant steps on our way to achieving financial freedom.

On a parting note, I have to say that my thoughts here are not original – many authors on the web and elsewhere are saying the same thing. In particular, I’ve found the site Get Rich Slowly to be full of interesting thoughts and tips, with the article here being very relevant. Hop on to the site and have a look: I think you’ll find it useful.

Steve’s blog: how’s your lifeboat?

Stephen Nel — Tue, 29 Sep 2009 07:00:00 GMT

We’ve all been in the situation before: sailing along on a more or less even keel when suddenly an enormous wave appears from nowhere to upset our careful navigation as it threatens to capsize our carefully nurtured boat. How prepared can we be for these kinds of events? What’s our capability to survive a financial crisis, whether general or personal? Recently experiencing a personal financial crunch got me thinking about strategies we should have in place to ensure that our lifeboats can cope. After all, the situations have an inevitable feel to them rather than just an occasional one…

An interesting short book dealing with such things is Robert Pagliarini’s Plan Z: How to survive the 2009 financial crisis, which is available as a free download here. There are several things he says which make a lot of sense and it’s worth a read – short too, so it’s not too much of a strain for those of you with an aversion to reading! I have mixed some of his thoughts with my own.

The first point to bear in mind is that you need an emergency fund – money set aside (preferably in a separate account) which you don’t access except when that wave strikes. Typically, this should be around 3 – 6 months of your average monthly income. It sounds like an enormous amount if you don’t have anything to start with, but the peace of mind that it brings can’t be overstated. It is a real relief to know that money is available (and not on loan!) when you need it for some emergency and you can only achieve this by building that buffer – and, of course, repaying it when you have to dip into it. Pagliarini goes so far as to say that you should even avoid paying off credit cards in favour of building up this reserve – just keep making the minimum payment – and even consider putting some of that home loan equity into a savings account, the interest difference being worth it to maintain the buffer. Bear in mind that he’s writing from a US perspective and that our tax and interest rate regimes in SA mean that doing so might not be as wise here, but the point remains: ensure that you have access to funds in an emergency, that they are immediately and without question available. Use those extra amounts that come in – bonuses, tax refunds, etc – to build up your fund.

The second point to remember, and it’s perhaps more related to a time of general crisis but will serve you well personally, is to keep your commitments short term. That new 5 year agreement on your car? That irrevocable two year arrangement for your cellphone or some other shiny toy? Not a good idea when the sea is swelling dangerously – you need to have the flexibility to rearrange your monthly budget to meet immediate needs and long term commitments only hinder this. Rather leave those arrangements (if they’re ever a good idea at all, actually) for times when you have a much better sight of the stability that they require. You need to be able to be ruthless with your expenses to be able to cope and the fewer and lower your fixed commitments are the more easily you will be able to do so.

Thirdly, stay positive and keep perspective. This may seem very abstract when faced with concrete financial issues, but your coping techniques, if effective, will enable you to ride out a financial crisis more easily than if you are drowning in despair. Use the opportunity to reduce “clutter” in your life: “Our life is frittered away by detail... Simplify, simplify, simplify” said Henry David Thoreau. Exercise, get closer to family, entrench yourself as a star at work without just a greater commitment to the rat race. All of these things we can do regardless of financial means, but I do believe they will have a positive outcome on those financial means eventually.

Financial crisis of one sort or another, personal or general, seems to be inevitable rather than something we should think will never happen. Being prepared and ensuring our lifeboats are in good order, though, will enable us to ride out any storm rather than being sunk by it. What has helped you to do this?

Steve’s blog – how to sink your boat (or not)

Stephen Nel — Tue, 01 Sep 2009 19:33:00 GMT

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Here’s the picture: you’ve taken a good look at your financial situation, realized you’re not where you want to be and aren’t even going in that direction, made some hard choices and put a plan in place to change things. What is one thing that can scupper your plans effectively? Simple – don’t discuss them with your significant other or involve them in any way.

“Honey,” the story will go, “I saw such a great deal on this fantastic pair of boots/computer/leather couch, I actually saved us a fortune!” And that will be the end of your carefully planned budget for that month – or several, depending on the amount of the “savings” in question. It’s no wonder that the issue of money and how it is spent is one of the most contentious issues in any marriage or other long term relationship. For myself, I have the great good fortune to be married to a Scot who is naturally parsimonious and frets about money far more than I do; even we have found that it’s easy to be out of sync on this subject and the effects of this can take a long time to unwind. So I thought I’d relate some of the lessons we have learned and you may find them useful too.

First, assess your situation together. You need both to understand and agree on what your situation is and what the future looks like if you continue with your current patterns. Many people split the financial duties in a relationship (e.g. you pay the groceries and I’ll pay the bond) which, while a good idea in terms of sharing the load, does mean that neither has a complete overview of the joint financial situation. It can be a very sobering thing to see that only one of you has the discipline needed – especially when you’re not that one!

Secondly, agree on your budgets and goals together. We’ve found that it’s vital to decide on this together, because it’s all too easy to pull in different directions if you have different likes/dislikes/priorities. This is especially so when you come into extra cash together: one wants to save and another wants to spend on that shiny new toy, but money gives only one opportunity to do either. The same is true of the budgeting process: realizing that the pot is only so big, it’s vital to ensure that you’re on the same page as to how it gets allocated or the temptation will be to ignore the budget if you don’t feel things are fairly split.

Third, meet regularly to review where you’re at. My wife and I have found this to be the hardest element as talking about this aspect feels more like a chore than anything else. It seems only Trevor Manuel can make budget talks vaguely interesting! Nevertheless, not checking how we’re doing lets things run away with us far more quickly than we’d like. Scheduling an evening every two weeks or so to go through things is incredibly handy in staying on top of our situation.

As a final note, the real benefit is to be found in what it does for your relationship. It isn’t always easy to be honest about these matters, but doing so means that a very contentious topic can be dealt with smoothly (ultimately) and setting goals and working through something together will cement your relationship with your partner in many ways. And, at the end of the day, isn’t that worth more than anything else?

Steve’s blog – a budget in your pocket pt 2

Stephen Nel — Mon, 17 Aug 2009 12:16:00 GMT

Last time we looked at a few simple options for practical management of your finances, including the “little black book” and Excel spreadsheets. This week, it’s time for a look at more sophisticated products – and also some that I think are more convenient. For me at any rate, that’s important!

If you’re a PC user, there are several software companies that have dedicated personal financial management offerings. The nice thing about these is that they allow you to keep a full financial history, with information sorted into categories and subcategories, tracking the people to whom you make payment and monitoring the balances in your accounts – provided you keep it up to date, of course! This is not as difficult as it might seem, because they generally allow you to import files from your bank (in CSV or QIF format, to get technical) which makes entering the information a lot faster and simpler. The packages will all allow you to generate budgets and track your spending against them as it occurs, and many have useful tools for tracking investments, calculating loans and net worth and managing debt reduction. Another convenient thing about the packages is that they help to make sure you don’t miss anything when setting up your financial position and budgets – for myself, I’m always forgetting my annual expenses without them…

One of the best known software packages was Microsoft Money, but a notice on their home page states that the product has been discontinued. Not sure why this should be so - it’s one I still have and find useful - but fortunately there are other companies that still offer solutions. For a good review of these, visit the relevant page at Top Ten Reviews. Their top three recommendations are Quicken Starter edition, Moneydance and Ace Money. All three look to be very usable, though the latter two products seem very simple compared to what Microsoft Money was. Be warned about two things, though: the products are relatively expensive (US$30-40) and many of their features, such as online banking, cater only for US customers. Apparently the rest of the world doesn’t exist or already knows how to manage their money (well, looking at reasons for the recent financial implosion…). However, both Moneydance and Ace Money have trial or lite versions that you can download for free to try before you buy and see if you find them worthwhile.

Finally, my favourite: literally the electronic budget in your pocket – your cellphone. Mobile devices have come a long way since the days of monochromatic clunky bricks and many of them can handle an astonishing variety of tasks, including personal financial management. True, your handset will need to be a little more high end to be able to do so, but these actually abound at the moment and are commonly available on a R120-R200 contract. The beauty of using this method is its portability – your phone is almost always with you so you don’t have to remember to bring anything else along and you can enter your transaction there and then. The applications themselves do vary a bit and aren’t quite as comprehensive as a dedicated computer program, but most allow for tracking your expenses by category, setting up and monitoring budgets, generating reports on your spending and income and sometimes even importing and exporting those useful little CSV and QIF files. Very simple, very useful, very convenient.

There are any number of applications depending on the device that you're using. If your phone is something like a Nokia running Symbian s60v3 (e.g. any E series or N series phone), Google “Symbian s60 finance app” to bring up a long list of what you can use – two of the better known ones are HandWallet Pro and Money Manager. If your phone is a Windows Mobile device, you probably have access to the best mobile finance applications on the market – two you might like to try out are Spb Finance and Cash Organizer Premium. If you’re an Apple convert, you'll find the app store full of interesting stuff – try iXpenseIt or Pocket Money (which I’ve been using very happily). Again, almost all of these applications will have trial or lite versions that you can download for free and try to see if they suit your needs.

Though having a complete and updated financial picture can be depressing(!), it's always useful and these are good tools to help you get there. Happy experimenting!

Set medium to long term goals

Stephen Nel — Thu, 07 May 2009 08:03:00 GMT

You don’t have to be a keen follower of financial markets these days to realise that we are well and truly in the grip of a global economic crisis. The distant rumble of losses at overseas banks has become crashing thunder here at home as we’re treated to downpours of woeful news seemingly every day. One side effect of this is that people are suddenly very focused on managing their money properly: this is a good thing, but it needs to become a lifestyle change rather than just a reaction to a crisis. Eventually the crisis will dissipate and we don’t then just want to return to bad habits of old.

One piece of advice I’ve found invaluable in trying to master my own financial affairs is making sure I have a medium to long term view of what I want to do with my money, what goals I want to achieve. Of course, getting a handle on your current spending, working out a budget and then sticking to it are essential first steps but the discipline is hard to keep to when you can’t remind yourself of what you’re working for in the first place. In addition, I’ve found that the extra money that comes in unexpectedly disappears pretty quickly if you don’t have a goal to put it towards: the stress relief of blowing it on that wild night out feels pretty good at the time, but there’s always a vague feeling of an opportunity missed afterwards.

So the trick, for me, has been to sit down (with your spouse/partner!) and to list all the things that I would like to see in a five year time frame and a ten year one, without having to rely on credit. Sounds too long a period? Don’t forget you were unconsciously doing that when you signed up for your car or house purchase on credit. The list mounts up pretty quickly - an overseas trip, a new car, an education fund, no debt - but it’s an eye opening thing to have them all down on paper in front of you. You soon get an idea of what it would take to get there and (after that rude shock has pruned the list a little) it’s liberating to start working towards those goals slowly but surely.

I still have to be able to tell you what it’s like to achieve the goals, but I can tell you that just setting them is helpful and goes a long way to entrenching the financial discipline you start. Give it a try.