Money management & Debt control


Money management & Debt control

”Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”
Ayn Rand

Rands with Sense SABC2

You have just finished your studies and have taken up your first job. You are entering the adult world of earning a salary. It is an exciting time with lots of decisions on how you should spend your money. If you can learn to manage your money while you are young, you will grow old and still have money.

Questions you might have:

  • Should you buy or rent accommodation?
  • What about the fancy 2-seater car you always dream about?
  • Designer clothes, shoes or jewelry?
  • An expensive cell phone or laptop?
  • A big screen TV with DSTV?
  • Pay off your credit card or student loan?

The person who doesn’t know where his next dollar is coming from usually doesn’t know where his last dollar went. Unknown

Before you sign up for your first job, look out for the following add-on’s that might mean extra money in your pocket every month.

• Does the job include retirement & pension fund contributions?
• Does it offer a medical aid?
• Is there a gym membership included at a reduced rate with the medical aid?
• Do they offer a travel allowance?
• Do they offer a house allowance?
• Do they offer a car allowance?

What is the difference between Bruto and Nett income

Bruto / gross pay:

Gross pay is what you make before any deductions

Nett salary:

Net pay is what’s left after taxes, health benefits and other deductions are taken out of your check. Knowing the difference will allow you to develop a realistic budget based upon your take-home pay.



The word ‘’budget’’ has a negative feel to it for many people – but budgeting has the potential to help to reach your dreams and goals. Without a budget you will quickly spend your salary within the first week of the month and have nothing to show for it. Money basically goes in three directions: fixed costs, financial goals and flexible spending. A simple way to manage your money is the 50/30/20 % principle.
50% – fixed costs (bond payment, municipal bill, medical aid, insurance)
30% – flexible spending (groceries, travelling, eating out, shopping, hobbies and entertainment.)
20% – financial goals (savings, paying off loans, credit cards, retirement funds)

The 50/30/20% principle is calculated on your ‘’take home pay/ net pay’’ – it means tax has already been deducted from this amount.

Example of Fixed costs – 50%
Accommodation : 20%
Car: 10%
Insurance: house/car
Utilities: water, electricity
Cell phone account
Telephone account
Gym membership
Medical aid

Example of Financial goals – 20%

Credit card debt repayment: 5%
Savings: short term: 5%
Savings retirement: 10%
Emergency fund

Example of Flexible spending – 30%
Eating out
Car maintenance
Parking & traffic tickets
Salon treatments

Record your expenses

The first step in saving money is to know how much you are spending. For one month, keep a record of everything you spend. That means every coffee, every newspaper and every break-time snack you purchase for the entire month. Once you have your data, organize these numbers by category – petrol, groceries, mortgage, etc. – and get the total amount for each.  Draw up a budget.

Now that you have a good idea of what you spend in a month, you can build a budget to plan your spending, limit over-spending and make sure that you put money away for a rainy day.

Note on buying cars:

Buying a car is a big expense.  We have been duped to spend our hard earned cash on new expensive cars for way too long. In South Africa between 5000-7000 cars are repossessed every single month because of non-payment.  If you are trying to use a car as a status symbol to let the world know you are successful, you will probably never be rich.

You should never spend more than 10% of your salary on a car. Make sure you can afford the petrol, maintenance and insurance of the model before you buy a car. According to the AA, between 65 and 70% of the estimated 12-million vehicles on South African roads are uninsured, and this percentage is growing annually. Choose a second hand car if you don’t have money to buy a new car with cash. If you cannot afford a car, make use of public transport.

Note on buying a house:


You should never buy a house that costs more than 2 x your yearly gross income. That means if you earn R 300 000 per year, you should buy a house/townhouse in the R 600 000 price range. You should use a 15 year loan period. Remember that you still have to pay for house insurance, property tax and maintain the house too.


If you can’t afford to buy your own property, you might need to rent accommodation. To keep costs down you can share with a roommate. If you are married or have kids you will need more bedrooms. You might also be charged extra if you have pets. To calculate how much to can spend on rented accommodation, landlords usually require that you earn 3 times the rent amount per month. It means 30% of your nett income. So if you earn R 9000 per month, you should not pay more than R 3000/month for accommodation.

Difference between needs and wants:

A need is something that will cause major inconvenience if you would stop that, like your electricity bill, prescription medication and car payment. A want is something that causes very little inconvenience if you don’t spend money on it like DSTV, entertainment and convenient foods. Water is a need to stay alive, Coke is a want.

Never budget more than 30% of your budget on wants. Wants fall under flexible spending. It is a good idea to divide the flexible spending up in needs and wants as well. For example: bread is a need and ‘’Oreo cookies’’ is a want. Both fall under groceries.

“The man who never has money enough to pay his debts has too much of something else.”
-James Lendall Basford

Financial goals

Spend at least 20% of your netto pay on paying off debt and saving money. You should pay off the full amount you owe on your credit card every month. Never accumulate debt on your credit card, because it is the most expensive money you can borrow. It is called a credit card, not a debit card. It should always have a positive credit balance.
If you are already buying monthly groceries on a budget plan on your credit card, you are in trouble. The debt will accumulate faster than you can pay it off. Draw up a budget and stick to that, until it is completely paid off.

Student loans & bursaries

Many students  never learnt to manage money responsibly. Tempted by freedom and peer pressure they often spend their study money on new designer clothes,  jewelry, a Play-station / DSTV and big screen TV’s. When the bills arrive from the university or college, all the money has been wasted.
It is wise to open a separate account for the bursary or study money. Some banks give you the option of three linked accounts in one. Put the money for books and lectures in such a separate fund, and only use it for that. Have a separate account for your daily living expenses.

Get help

Quiz: Debt Warning signs

You can do a self test quiz to evaluate if you have a debt problem.

Debt Quiz: Warning signs


If you need more advice on your personal financial situation, you can chat to a facilitator on the LIVE CHAT.

The service is text-based and you may remain anonymous.


More help

Dealing with debt

Debt: Ways to save on monthly expenses



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