Feedback from Gary Kayle, founder of The Money School and a facilitator of 1Life’s Truth About Money initiative.
Q1: Difficulty attaining financial freedom – what are the reasons?
A1: Most people are never formerly taught how to manage their money. Money management, and developing financial literacy or financial intelligence is a learned skill through practicing financial responsibility. When this basic building block isn’t in place, it affects one’s ability to financially plan accurately each month. And without doing that, there’s very little chance of financial freedom.
Q2: What are the biggest financial mistakes people make – eg. not having a will, not budgeting etc.
A2: In our view, the single biggest mistake people make when it comes to their finances, is not having an emergency fund in place. An emergency fund is a critical buffer that prevents an individual from having to use debt, like a credit card, or cash in savings or investments to deal with a financial emergency. If I could wave a magic wand and change just one thing to improve everyone’s financial position, this would be it! It’s that important.
Q3: How does one start?
A3: When it comes to putting money away for an emergency fund, we like to give everyone two goals to achieve. The first is to have R5,000 put away. This is a great first step towards building a bigger emergency fund goal, which is to have 3 months gross salary saved up.
Q4: The importance of financial literacy – will education necessarily lead to behaviour change? (People know smoking kills but still do it, they know they should budget, but often don’t – or spend emotionally).
A4: Learning to manage one’s money comes down to two things - knowing what it is that one is supposed to be doing and then actually doing it. We believe that it is impossible to change behaviour with money until an individual understands what they need to do with their money and why it is important to save it.
Furthermore, developing financial literacy alone isn’t good enough. If someone wants to be financially free, they need financial intelligence. And that’s what we’re so passionate about teaching, through the 1Life Truth About Money course. We cover the basics of money management – things like how to budget and get out of debt. But more importantly, we educate individuals to act and think in a more financial savvy manner. Developing this kind of financial intelligence is what drives real change and gives people the skills to become financially independent. To find out more, visit http://www.truthaboutmoney.co.za/