10 simple money tips

It's never too early to learn the basics of money management, even if you've just started out in the world of work. Whether you're thinking about banking, insurance, retirement, or investing, here are 10 tips to keep you on track. So follow these, and you will be well on your way to making the best use of your money.

  1. Understand the basics
    First, understand the basics. Before you sign on the dotted line, make sure you understand what you have promised to do (whether it’s make regular payments, or commit a lump sum), and what the company has promised to do (provide a loan, cover a loss or provide a savings plan).
    Then, look for exceptions or qualifications to these promises. For example, an insurer may not have to pay your accident claim if you lent the car to someone for a few hours.

  2. Ask questions
    When you are presented with a contract, don't be afraid or embarrassed to ask questions. A reputable product provider should give you enough time and information so that you can understand the product. You can also ask to take the documents away, so that you have time to read them and get advice. Don't be pressured into signing something that you're not sure of.

  3. Filing, filing, filing
    Anything to do with money often involves lots of paperwork — account statements, contracts, policy documents, terms and conditions and more. If you're tempted to throw all this paperwork in the bin — stop! Even if you don't read it all straight away, get into the habit of keeping the important paperwork in a special file that's easily accessible. It will come in handy if you have a question or problem about your financial affairs.

    You should also get into the habit of keeping notes from any important telephone calls you have with your finance institution. Again, they might help if you have a complaint.

    Your notes don't need to be a thesis, but it's important to record basic information such as the name of the person you spoke to, the date and time, and an outline of what was said. Keep this with all your other paperwork.

  4. Reduce your banking costs
    Although we gripe about banks, they are still a necessity. But don't be complacent about your account — there are ways that you can reduce the costs. Negotiate with your bank to get your charges reduced. As you become more established ask for even better discounts. Use internet banking rather than visiting the branch, it’s a lot cheaper. Ask your institution to tell you about the main fees and charges, and whether you are entitled to a certain number of free transactions. You can use this information to help you develop cheaper banking habits.

  5. Keep your PIN code secret
    Minimise the risk of unauthorised transactions by keeping your PIN codes secret. Don't tell anyone your PIN or password, even friends and family. Also, don't keep a copy of your PIN or password near your card or on your computer, unless it's password protected.

  6. Watch those debit orders
    Debit orders can be a great way of making sure that the necessities of life — like your bills and rent — are paid on time. But make sure you know how to cancel a debit order if you need to. To cancel it, you should tell both your bank and the company making the debit (eg your cellphone company). Writing a short letter is often best. Keep a copy of the letter, and if problems arise, contact your bank straight away.

  7. Shop around for insurance
    Shop around for insurance like you would for a car. Having a good insurance policy can make all the difference to your pocket — both now and if you need to make a claim.

    When you apply for insurance, you'll have to provide lots of details to the insurance company. For example, if you are getting car insurance you may be asked about your driving record, whether the car has been modified, and other things. Your answers will help the insurance company decide how risky it will be to insure you, and therefore how much your policy will cost. Don't be tempted to fudge the facts! If you do, your insurer may have grounds for refusing to pay your claim.

  8. Think about insurance before buying a car
    You might think that, if two cars cost the same amount to buy, they would cost about the same amount to insure, but the cost of insurance often depends as much on the type of car as it does on the cost.

    For example, a sporty car might look great, and impress your friends, but it could cost you rather more to insure than a basic model. It's better to be prepared for these extra costs than to get an unpleasant surprise after you've bought the car.

  9. Spotting scams
    If you're thinking about investments, you need to think about what level of risk you are prepared to take. The higher the return, the higher the risk that you will lose all your money. Remember that there are no easy ways to "get rich quick". Stay away from investments that promise incredibly high returns for low risk and little work. They are usually scams.

    Other warning signs for scams are: lots of exclamation marks and capital letters in the advertisements and no physical address, just an email address or post office box, and lots of assurances that the scheme is legal. Be cautious. If you think an investment opportunity looks a bit dodgy, make some enquiries before you commit your money. Talk to a financial adviser if you are in doubt.

  10. Save for retirement
    If you are just starting your working life, retirement will probably be the last thing on your mind, but if your employer offers you a savings plan through the company you should take them up on it.

Article by: Alex Eliseev from - www.iol.co.za