Money. It makes the world go round. It won’t make you happy. It’s the root of all evil. How much do you earn? How do you earn it? Are my parents spending my inheritance? How can I earn more?
As long as money has been around, people have been talking about it, discussing it, thinking about it, stealing it, making it, and losing it. Some have too much, some have too little, and the people in the middle wish they could be the former and are thankful they aren’t (and sometimes fearful they might become) the latter.
Money. It’s a terrible master but an excellent servant. The reality is that either it serves you, or you serve it. There is no other way. You either control your money, or it controls you.
The good news is that money can be controlled. It can be made to serve you. But the better news is that you don’t have to be a financial genius to do it. Being a financial professional isn’t a prerequisite for handling your money well.
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The real secret to managing money isn’t skill, knowledge, a fancy Excel budget, or any app. It’s good old-fashioned, boring discipline. I like to make sure I’m disciplined in three areas with how I manage my money:
1. Perception and Envy:
Just because somebody has something doesn’t mean they can afford it. I make sure not to admire someone as successful based on what I see them buying or spending money on when I have no insight into the state of their credit card or relationships. I ensure that I don’t envy or covet what others have and feel pressure to keep up with the Joneses. It’s about being disciplined in my thoughts about how I perceive other people’s “success” and not allowing myself to make unwise decisions just because others may be. Making peace with the fact that there will always be someone richer, with a nicer car or house than me, is essential.
2. Needs vs. Wants:
I buy what I need, not what I want, and not in a restrictive way. It’s about thinking critically about what you need at any given moment. For example, I wanted to build a floor-to-ceiling bookcase in my lounge. It would have looked amazing, and my wife loved the idea. We planned it and got quotes, but then we paused and asked the question: Is this something we want or something we need? The reality is that our current bookshelves do a perfect job of holding our books. We don’t need a custom-built bookcase, so we agreed to put it on the back burner and make smarter decisions about where we spend our money.
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3. Avoiding Unnecessary Debt:
If I can’t pay for it in cash, I don’t buy it. For most people, myself included, buying cars and houses in cash is not feasible. But those are necessities. I spent nearly 10 years doing Ironman races and was continually horrified when I saw stores advertising bikes on credit. A fancy bike is not a necessity, nor is a holiday or a wedding. The fastest way to prevent yourself from building wealth is by going into debt and paying interest on luxury items. Every time I’m tempted to buy something on credit, I ask myself if I’m prepared to pay 18% – 22% more than the listed price. If the answer is no, I do not buy that thing on credit.
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One story from my time doing articles has always stuck with me. One of the Partners was telling us about a client who had to sell his Ferrari to pay a tax bill. “Surely if he can buy a Ferrari, he has enough money for his tax?” I said.The Partner looked at me and said: “It doesn’t matter if you earn R100,000 a year or a million Rand a year – if you spend more than you make, you will end up in trouble.”So let that be a lesson to all of us – financial freedom comes from having the discipline to control our money rather than letting it control us.
**by Gareth Price, Founding Owner and CEO of Cloudworx Accounting Solutions
For more financial insight and guidance, join Gareth Price at his next Finance Workshop series: Modern Accounting. The next workshop runs from 9 am – 12 noon on 23 & 24 July 2024 at Workshop 17 in Ballito. Book tickets here. Johannesburg follows on 15 & 16 August from 9 am – noon. Book your tickets here.
Meet Gareth Price
Gareth Price, a successful entrepreneur hailing from Cape Town, is the Founder of Cloudworx Accounting Solutions, the owner of Investmint, and serves as the CFO of Back a Buddy. With a distinguished career spanning over a decade, Gareth holds a Bachelor of Commerce in Business Sciences from the University of Cape Town and earned his CA(SA) qualification in 2012. His entrepreneurial journey began immediately after completing his articles, founding Cloudworx Accounting Solutions to provide innovative accounting solutions and practical financial guidance to businesses. Recognising the challenges faced by SMEs, Gareth initiated Investmint, a crowdfunding platform aimed at bolstering the SME economy.
