Improve your financial IQ

A budget should take into account all your fixed expenses, such as rent, municipal bills, student loan repayments, travel costs - anything else you need to pay on a monthly basis.

If you're not managing to make ends meet on your salary, you either have to find a way to earn more, or cut your expenses. This could mean moving to cheaper accommodation, switching to using public transport, or cutting back on buying new clothes.

In short, you need to find a way to distinguish between your needs and your wants. Getting to work is a need, but doing so in your own car is a want.

Financial security for the long run

Just spending until the money is finished (which is tempting in the beginning) will never get you the financial security you want in the long run. Finding out how the world of money works is crucial.

Here are some basics you need to know:

• Debt - a sum of money that you owe a person or a bank
• Interest - money you regularly have to pay extra on cash that you have lent, or money that you earn after lending money to someone else, or money that you earn on an investment
• Inflation - a general increase in the cost of goods (and a decrease in the purchasing power of your money)
• Investment - a way of saving that will profit you
• Saving - money you've put away, usually in a bank or a savings scheme
• Compound interest - interest calculated on the initial principal sum of a loan or deposit, as well as on the accumulated interest of previous periods of a loan or deposit.

Saving and investing money is wise, as compound interest over time will make your money grow. Eventually you'll be earning interest on interest - a very good position in which to be.

Starting young

The best way to save when you're young is to pay off all your debts as quickly as possible. That way you'll be reducing interest payments. It's important not to create new debt, so that you can start putting money aside every month.

Also, a debit order going off your account into a savings account at the beginning of the month will mean that your savings get "paid" right away, instead of at the end of the month and only if there's money left then. Pay yourself first every month, not last.

Ways you can save or invest your money

• Cash - a fixed-term money deposit that earns you interest is probably the easiest way to start off with a savings plan if you've just started working
• Tax-free savings accounts - these allow you to save up to R33,000 per year without having to pay tax on the returns or the capital
• Retirement savings - pension plans
• Equities - shares and stocks
• Bonds - these involve lending money to a company/government in return for a fixed amount of interest
• Property - you can either buy a property or buy shares in a property company