Financial Management

Managing money wisely, debt and credit

Managing Money Wisely

Financial management means making smart decisions about earning, spending, saving and borrowing money. Good management builds wealth over time. Poor management leads to debt and financial stress. Key skills include budgeting, saving, avoiding unnecessary debt and planning for the future.

Example

Smart vs Risky Financial Decisions

SMART decisions: • Save before spending • Compare prices • Avoid borrowing for wants • Build an emergency fund • Invest for the future RISKY decisions: • Spending all income • Borrowing from loan sharks (mashonisa) • Buying on credit for wants • Gambling • No savings for emergencies

Note

Remember

Debt is expensive — you pay back MORE than you borrowed (interest). In SA, many people are trapped in debt. Avoid loan sharks (they charge very high interest illegally). If you need credit, use registered institutions. Build an emergency fund for unexpected expenses.

Key Vocabulary

Financial managementMaking smart decisions about money

DebtMoney owed to someone else that must be paid back

CreditBuying now and paying later (borrowing)

Emergency fundMoney saved for unexpected expenses

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Financial management

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