Money power

1. Money power Change your relationship with money

2. About the presenter • Riaan Steenberg PMP, MBA • Started by studying actuarial science • Completed Licensed International Financial Analyst Exams • Designed financial business models for large and small organisations • Busy doing CIMA • Wide experience in financial matters

3. We are taught some strange things about money… • Money does not grow on trees • You can never have enough • Money can’t buy happiness • It is better to be rich and unhappy, than to be poor and unhappy • Being good and being rich are mutually exclusive ideas

4. What is your attitude towards money ? • Do you have power over money ? Or • Does money have power over you?

5. Why do you want money ? • Is it because you are looking for ? • Approval • Security • Control • Separation • Oneness • If it because of one of these reasons then you will keep putting in more effort to get there and increasingly get less results. Let it go and do it because you want to.

6. Some basics • Save • Pay of debt • Get rid of rubble • Look carefully at charity • Stop losing money • Change your money attitude • Making money • Portfolio investment • Risk • Insurance • Making money

7. Save • At least 10% of the income that goes into your bank account should be in a place where you will not spend it for the next 3 months. • This should apply even if for emergencies. • It is better to make short term debt than to touch your fixed long term investments. • This is not money that is better to put into your access bond or somewhere else. • If you can stay away from spending it at all you will start building capital. This is the seed of a money tree. • To start off put it into a fixed deposit, money market account or separate bank account. If you are brave, buy shares and start investing it.

8. Pay off debt • Work out how much debt you have. • Divide it by the amount of time you need to pay it off (12, 24, 36 months) • Cover the minimum payment on all your debts. If needed using the rolling credit method. • The rest of the amount that you have after this must go to your largest or smallest debt. • Keep going till you have paid it all off. This creates a saving in interest that puts more cash in your pocket and allows you to snowball the payment of your debt. • Pay a maximum of 20% of your salary off on short term debt. If you have more debt than that then don’t save – first pay up to 30% of your salary on debt. • Once you paid off short term debt – pay it on property.

9. How much debt? • 1 salary will take you 1 year to pay off @ 10% per month • 2 salaries will take you two years to pay off

10. Charity – an invisible debt • Most religious traditions suggest that 10% of money should go to charitable purposes • Charity includes • Supporting parents, siblings or other family members • Payment of religious institutions • Direct and indirect expenses contribute to charity

11. Laws about the levels of giving • Helping another to become self sufficient. Giving an interest-free loan to a person in need; forming a partnership with a person in need; giving a grant to a person in need; finding a job for a person in need; so long as that loan, grant, partnership, or job results in the person no longer living by relying upon others. • Giving charity anonymously to an unknown recipient via a person (or public fund) which is trustworthy, wise, and can perform acts of charity with your money in a most impeccable fashion. • Giving charity anonymously to a known recipient. • Giving charity publicly to an unknown recipient. • Giving charity before being asked. • Giving adequately after being asked. • Giving willingly, but inadequately. • Giving "in sadness" (giving out of pity). Giving grudgingly.

12. Get rid of rubble • Hoarding is a very bad habit – that costs a lot of money. • Get rid of things that you do not need • Sell them, give them away, do not collect them • Focus on your needs – not your wants • You may find you need much less that you have. If you get rid of these things then this allows you to get more of what is better. • Reduce any ongoing costs as much as possible. • Rubble – subscriptions, clothes, varieties, trinkets, collections

13. Enabling / Disabling expenses • Some expenses enable you • Licences • Car • Food • Improving properties • Some expenses create other expenses • Poor workmanship • Unfinished goods • Hobbies • Overcapitalising properties • Bad investments • Specials, promotions and pressure buying • Illegal activity, poor judgement • Not paying to plan

14. Stop losing money • Budget - ABC • Be economical in daily activities • Reduce, reuse, recycle • Loans • Never loan money to other people, unless you are willing to lose it • Always pay back money you owe others • Reduce recurring expenses • Account for the cash that you withdraw from the bank • Negotiate everything • Never share your salary information with others • Research your options – do not accept that others know your money • Be careful of all advice

15. Change your money attitude • You need to let go of what you know and build a new relationship with money • Having a goal helps • I want to live comfortably and happy while saving enough for when I retire. • I allow myself to change my attitude about money • Knowledge is power • Spend on what you need, not what you want • Align your root chakra • Investigate your money beliefs and feelings and let it go • Tapping to remind yourself you are worth it • Your money goal

16. On risk • You have two sources of risk • Uncertainty • Volatility (Up and Down) • If you are uncertain – then be careful to match the amount you put in to the amount of uncertainty • If there is volatility the having more and different types of investments decreases volatility • Match the solutions with the same type of money. Short term problems must be solved with short term finances. Long term problems, get solved by long term finances. Don’t fix short term problems with long term money and don’t fix long term problems with short term money.

17. Buy quality • Quality means that if you choose from two options, the one with quality will cost you less in time. • A quality car can last you ten years, a cheap car will be half the price but last you five years. What is the better deal ? The quality car. • Quality is also quality of life • Vitamins costs lots of money • Spend the same money on seeds, and plant a small garden • Contains vitamins, gives you a hobby and satisfaction and gives you a sense of purpose. • Vitamins are not proven to do anything for you – gardening is very beneficial. • Buy bulk – only if it saves you money and it is stuff that you use daily. Measure it out and sure you save from bulk.

18. Insurance • Take life insurance while your kids are young. The rest of the time it will not be your problem. • Take a basic hospital plan. The rest you should save – unless you have chronic conditions. • For the rest of the time – insure for as much as half of the assets that you are buying and have debt for. • Review your insurances regularly and negotiate them. • Whenever you have a debt – it is good to take insurance for any amount that is not covered by your assets. • The best insurance you can take is to make sure your kids can study. The rest must go into boosting your career and education.

19. Education • Experience is the base of a salary • Professional qualification can increase your earnings by 3 times • Masters degree typically increases your earnings by 5 times • Having a PhD by 40 increases your lifetime earnings by 2 times • Best salaries are earned by • Taller people • People staying in jobs for 6-8 years • Professionally educated people • People with management experience • You have to ask daily what you are doing to increase your knowledge

20. Portfolio investment • Ideal portfolio is long term and is balanced between different asset classes. • Optimise risk reward • Cash – e.g. Fixed Deposits, Money Market • Retail bonds • Shares • Fixed Deposits • Property • Investment policies (last but not least) • Own business

21. Property • Properties are a great way to build value over time • Basic idea • Buy a small property and rent it out for at least 80% of the bond payment and rates amount. Remember to increase annual rentals. • Pay the additional 20% to cover the installment on the bond and any additional money that you can put into it. • Evaluate the value of the property from time to time. • In about two to three years you will be covering the bond with the rental and can purchase another property. • Another strategy is to buy and sell properties. • Some caveats • All investment is long term. Learn about property. Learn about tenants and make sure you can do this within the means of your family. You can lose money.

22. Making money • Weekends, evening • Trading • Buy and sell • Biltong, sweets, cupcakes, foodstuffs • Producing • Make something and sell it • Clothes, cakes • Deliveries • Vegetables, bread • Investing • Develop an investing strategy. Shares, properties, other items or services.

23. Shares • Passive strategy • Invest a fixed amount monthly into a share until you have enough • Build a portfolio of 10-15 shares • Trading • Invest in top 5 shares only • Monitor market information • If the share pulls back 5% then buy for 10% of your money • If the share rises back to the original level then sell. You have made 5% on your money. • If the share falls back another 5% then buy for another 10% of your money. • When the share rises back to the original level then you have made 10% on your money. • Never sell at a loss. • High risk • Same scheme with CFD’s. • Pay an investment house • Managed investments pay a small fee to manage your funds. • Unit trusts – a last resort.

24. Budget Breakdown • Save 10% • Debt / Wealth 10% • Household • Property 10% • Utilities, rates and taxes 5% • Groceries 15% • Children, School, Clothes, Books 15% • Communication 5% • Vehicle 10% • Other (Discretionary) 15% • Entertainment, Personal Care 5%

25. Parting words • Decide who you are going to speak to about money and build a network of trusted advisors in money • If it is too good to be true, it is not true… • Always evaluate options • You always have options • Remove waste • Start moving towards saving