Do you think before you spend? Immediate wants are often the main motivation when it comes to how we work with money, earned or borrowed. If behaviour can shape our health or create safer roads, there’s no doubt better choices with money can flex financial muscle too.
Personal growth and accomplishments come in many forms. One thing is for sure; when finances are in order and there’s less stress about money for a rainy day, you can pat yourself on the back. If you’re not there yet, you can still set yourself up for success.
It’s about knowing what to change, how to change it and to make that behaviour stick. The best way to start, is to set goals. Having clear and realistic savings goals can help you to stay focused on milestones toward your ultimate prize – healthy finances.
What do healthy finances look like?
Research by behavioural experts at Discovery Bank showed five main things we do affect our financial health the most – and it has nothing to do with the size of our income. These five things are: how well we manage debt, whether or not we save, have the right insurance, how we manage the payment term on property, and our retirement plans.
It can all sound very daunting – but it doesn’t have to be. Experts in changing behaviour agree it starts with having clear goals. Sometimes it’s not the short-term goals that discourage us, but the ones that extend long into the future, for example, retirement. Warren Ingram, executive director at Galileo Capital, agrees that long-term financial planning is naturally difficult: “If you’re 25 and you set a goal to retire at age 55, that is so far in the future the concept is almost academic.” In other words, it feels so far away that it’s simply “not realistic.”
Setting goals around specific behaviours
What’s important when you start out setting financial goals, is to make them realistic. Discovery Bank’s behaviour-change programme, Vitality Money, helps to change financial behaviour on the principle of understanding where you are now and then guiding you to implement realistic goals that are combined with rewards for every achievement.
These goals are shaped around the five behaviours that build financial wellbeing over time. If you’re curious, the Vitality Money Calculator on the Discovery website is available to everyone. You’ll get a quick view of your financial wellbeing and it can kick-start your thoughts around savings and other goals of adequate insurance, retirement funds, and managing short-term and property debt.
Be SMART about your savings goals
Vitality Money helps you set savings and these other goals, and you can track the progress of each goal through the behaviour-change app. Very similar to the well-known SMART system for goal-setting, which suggests that every goal should aim to be:
- Specific – say exactly what you want to do
- Measurable – to keep track of your progress
- Achievable – be realistic so that you can reach it
- Relevant – the goal has to matter or add value
- Time-bound – steps to reach the goal in a specific time frame
An example of a savings goal that is SMART would be: By 2025, I want to save R100 000 for a deposit on a property. Setting goals with practical ideas on how to save an extra R20 000 each year will make it easier.
These could be:
- - Save money by changing your cellphone package
- - Put away 80% of any bonuses you get
- - Only go out for dinner twice a month
- - Cycle to work three times a week to save on travel costs
- - Get after-hours freelance work
As humans we have to see some reward for hard work, be it exercising or making better money moves. And saving can be difficult when life happens. So when you are faced with any fork in the road, you will have to make a decision about whether or not you need to adjust your goals. In agreement with Vitality Money’s approach, Ingram says, “There will be factors that influence you. The bottom line is that you should always keep your eye on the long-term financial goal, and adjust your short-term steps to get there.”
To stay motivated it is important that you reward every accomplishment with something that you value, like a new book or a new experience. These rewards will keep you on track. That’s another aspect of Vitality Money – the programme rewards every savings or financial goal you reach with travel, food and lifestyle discounts. It also gives you the benefits of financial returns through Discovery Miles and increased interest rates as you save. Every choice that strengthen your current and future financial wellbeing comes with a reward.
There’s no doubt that with the right goals in place, it is possible to get going and to tick all the boxes of better financial health now and going forward. Start with setting your SMART goals today and check out the Vitality Money Calculator for some inspiration.
This article is written and sponsored by Discovery. The Vitality Money Calculator is for information only and does not constitute financial advice. Please consult your financial adviser before making any financial decisions
The 2020 Budget Speech is over and done, and that means we have new income tax percentages for the year to come. No need to delve back into your high school math skills, Discovery Bank’s handy Personal Income Tax Calculator will help you calculate and compare your monthly income tax based on the latest available tax figures.
Discovery Bank is not just a digital bank, it’s a fintech evolution that gives clients market-leading features and behavioural banking tools to change their financial health and improve their lives.
What does the health of your bank balance do to your brain and your body? The obvious answer is that if you have your ducks in a row, your heart and head can rest easy.
Discovery Bank is not just a digital bank, it’s a fintech evolution that gives clients market- South Africans who bank better, grow wealth and earn rewards. It’s all possible with the science behind behavioural banking. With technology that enables behaviour change, you’ll soon have a healthier financial outlook.