Traits that prevent people being in control of their finances

Most of us would love to have perfected ways to not mess up our finances. Yet, given how complex managing money is, it’s no wonder we’re not always the best. But, aside from studying for years to become experts at financial management, we should consider the link between the growing field of behavioural finance and wealth management.

First we should figure out what behavioural finance is and then see how it applies.

Behavioural finance defined

As Investopedia summarises:  

“Behavioral finance is a relatively new field that seeks to combine behavioral and cognitive psychological theory with conventional economics and finance to provide explanations for why people make irrational financial decisions.”

The importance of it is that it refocuses people as not being entirely rational, acting and behaving because of factors beyond their control. These often lead to bad financial decisions and terrible management of wealth.

Bad traits to avoid

The Royal Society for the encouragement of Arts, Manufactures and Commerce (or the RSA) compiled a recent list of the traits hindering people’s ability to manage their finances. Their report showed that particular bad beliefs shaped behaviours in unhelpful ways.

These are the six they noted.

Cognitive overload: When we have too much to worry about or on our minds, we make bad decisions. This often happens during times of financial distress, meaning we end up making matters worse. To counter this, we should seek professional financial help and try separate our knee-jerk responses.

Empathy gaps: This is when we purchase based on an inability to put ourselves into different stages of time. For example, we’ll buy food on an empty stomach but not when we’re full – this might be a bad choice for various reasons (buying while hungry could be cognitive overload, while full means we don’t save for later). This applies to bigger financial choices, too. The solution again is to be as neutral as possible when acting and acting sooner rather than later.

Optimism and overconfidence: Having unrealistic expectations drenched in optimism means we make bad decisions. We should operate on facts, not fantasy.

Instant gratification: Instead of saving for the long-term and making our money grow, we buy instantly. It feels better. We should be looking long-term (this ties into empathy gaps).

The report continues:

“Harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

Social norms: we are heavily influenced by the actions of others; while this can be helpful in certain circumstances, it also contributes to the pressure to keep up with the Joneses through conspicuous consumption.”

In each of these, the common response is one where we should be neutral and operate on evidence. Only in this way can we do better for ourselves in the future.

How much should you spend on a car?

Cars – even the cheapest ones – are expensive. A junker that breaks down twice a month will still set you back a few thousand. A nice one with leather seats and a sweet sound system costs more than most people make in a year. For most people, having a car isn’t a choice. It’s required to get to and from work, to go the grocery, to see friends – basically to go almost anywhere in a country where public transport isn’t always reliable.

If you are looking at buying a new car or used car, it’s important to choose a car you can afford to spend money on.

How much do you earn?

The car you are able to afford should be based on your income and how much you are willing and able to spend on a car on a monthly basis. Affordability is the most important factor to consider when buying new or pre owned cars. Please also consider your net and disposable income. The general accepted rule of thumb is that you shouldn’t spend more than 20% of your total income on car payments.

What costs should you consider before buying a car?

Firstly, the purchase price will affect how much you pay every month. The more expensive the car, the more you can expect to spend in monthly instalments. Secondly, your down payment. The more money you pay upfront, the less your monthly instalment will be. You can trade in your current vehicle or sell it privately, which can contribute towards a larger down payment. Then, your monthly insurance cost will depend on the type of car you choose to drive and your driver risk profile. Also, the fuel price and the distances you travel will influence the cost of owning a car.

How can you save money when buying a car?

Buying a car is expensive and can easily become a financial burden. To save money when buying a car, consider paying cash for the car if you can. This means you won’t have to worry about monthly instalments and crippling interest rates. If you can’t pay cash for the car, you’ll have to finance the car. In that case, aim to pay off your car as quickly as possible at the lowest interest rate you are able to obtain.

Down Payment

Try to make your down payment as large as you possibly can, you may even be able to apply for a shorter financing period. No down payment often leads to an ‘upside down loan’ which means that you owe more than what the car is worth. Avoid this situation at all costs.

The amount of money you choose to spend on a car will depend on your personal financial situation and how much you are willing to spend. Remember, buying a car is expensive and you should therefore buy a car you are able to afford and maintain over time without compromising your financial security.


How design thinking can improve the world

Making things better is never a destination so much as it is a direction. Improvement is ongoing, as we try to make the world a better place for everyone in all sorts of spheres. One way the smartest people are examining the world is through the lens of design and applying it to areas they otherwise would not. This is worth considering for business people, in terms of thinking outside the box and finding new ways to approach their services.

What is design thinking?

The broad category of design thinking has long been recognised as an ideal focus for business and all manner of responses to problems. As FastCompany notes, design thinking consists of four principles

  1. Define the problem: this means constantly questioning what needs to be solved and why. It’s not merely agreeing there is a problem, but knowing exactly why it is a problem in the first place. Many who use design thinking stress the need for definition, since the act of defining is a constant focus on clarification.
  2. Diversify our options: Just because a response has worked in the past doesn’t make it the best one. We must consider as many as we can which can help solve the problem.
  3. Refine the direction: After outlining solutions, we must narrow down the best ones. This is hard, because some responses require time to reach their potential.
  4. Execute on the chosen response: This simply means putting the response into action.

Though each part sounds obvious, the key to design thinking is observation and challenging assumptions about what we’ve observed. One expert told the Stanford Daily that design thinking is “a tangible scaffolding through which [one] can approach problem solving.” For her “reframing” the problem was perhaps the central tenant of the process. She noted the redesign of scissors as a tangible example of design thinking in action.

Healthcare application

One area we might not think this has an application is medical healthcare. Yet, at a recent conference, this was precisely the topic at hand. Medical experts at a Stanford conference noted that it’s helped reframe their approach to healthcare. They “are working to change the system by integrating design thinking into medical school training and patient care. Together, the speakers painted a clear portrait of what design thinking means to them.” From speaking more carefully to patients to rethinking interventions, they consider design thinking important in helping them improve their responses.

This is a mindset that can, therefore, operate on many levels – from designing scissors to rethinking healthcare. With such a vast scale, anyone – from artists to business people – can benefit from implementing such structure in their approach to problems.

(Picture credit: Dave Gray / Flickr)

Common mistakes that decreases a business’ value

A business’ value is everything to us as entrepreneurs. We want to create a business that thrives, retaining and increasing its customer base, delivering on promises and expectations. Yet, value is not easily obtained or maintained. So often, even the smartest business people make mistakes they should’ve known to avoid.

Forgetting profit margins

It might seem impressive if a business makes, say, $2 million a month. But that can become meaningless if its expenses are $1.9. Too often, we forget to truly appreciate profit margins, instead of revenue.

As Investopedia summarises: “Profit margin is part of a category of profitability ratios calculated as net income divided by revenue.”

As CEO Carl Erickson points out: “Profit alone doesn’t tell you as much as profit margin.” Margins are the first line of defence in a financial buffer. For Erickson, failure to focus on profit margins will decrease a business’ value and tend to indicate one that has a higher chance of ending up in trouble.

Any company interested in managing its corporate finance properly must consider this seriously.

Tough decisions

Faced with being able to keep the company alive versus employing an underperforming staff member is tough. A simple realisation sometimes is that there won’t be a company to pay this employee if we keep them, if they are harming the business.

Dick Grote, a management consultant noted: “Firing is the single most difficult thing we ask leaders to do… Even when the business justification is clear.”

Many might think that business people are merely empty suits, but often we are in positions where we know everyone. They rely on us for income and to be able to make ends meet. Yet, sometimes we have to end that relationship.

After all, it’s not merely one person we need to think of but many – including ourselves and our families. Failure and drawing out tough decisions can mean a business does poorly, since it means we’re paying for bad labour.

Not being vigilant

Sometimes success can be a cage. Business owners can look back at how the business is doing well and conclude nothing needs to change. After all, if it worked in the past, it will work in the future – surely? Unfortunately, as we now all know, the markets are incredibly volatile and new, powerful ideas are emerging all the time. Competition is no longer clearly defined, with various  businesses able to operate in multiple fields and suddenly dominate.

We must constantly be vigilant and think outside the box, no matter how successful we’ve been. It’s not one particular method that makes us good, it’s our ability to think creatively and carefully.

(Picture credit: Foto Infinity / Flickr)

Insights for SA investments in 2016

Knowing what to do with money is one of the most important things we must do. Unless we do this properly, money won’t simply be there or work for us without input. We must put in the necessary work, time and planning before deciding where to place our money. Broadly speaking, there are two directions we can take: saving or investments.

What is the difference between saving and investing?

As Personal Finance by the Book notes, there are significant differences between saving and investing.

“Savings are low risk funds that must be liquid (available) when you need them. The purpose of saving money is so you can have it for a specific purpose within a short time frame.”

Investments serve a different purpose. These we utilise for wealth building and aren’t, for example, emergency funds we can access at anytime. They involve more risk but also provide greater rewards. The richest people in the world became that way most likely due to smart and lucky investing.

Investment tips for South Africans

Every country has its own issues when it comes to dealing with the stock market. This means what might work in America might not work in South Africa. However, sometimes there are overarching perspectives from which anyone can benefit.

The first step to anyone considering their investments is to speak with professionals. Brokers can provide greater insight into how best to use our money, but that doesn’t mean their word is gold. Nonetheless, experts have been speaking about what people can do to help their investments.

For example, finance expert Warren Ingram pointed out the markets are extremely unsettled at the moment. With international events like the American Presidential election and the recent “Brexit” move in the UK, people are scrutinising their options more carefully than ever. Says Ingram:

“When global and local markets are so volatile, investors would do well to keep their portfolios highly diversified across a range of asset classes and international markets.”

By this, Ingram means we must not only invest in one kind of option or stock. We should consider many. As the saying goes, we don’t want to put all our eggs in one basket.

Importantly, we must not think of investments in South Africa like gambling – investments aren’t purely about luck, but smart interventions and consideration of our options. Gambling is entirely luck-based and no amount of research will tell us how to get the dice to land in our favour.

Other ways we can do well is to start saving and investing early. This allows time to do a lot of the work for us. Young people have time on their side and should use this to their advantage.  

Best communication tools for business and personal use

These days, the vast amount of information, data and programs we can run on multiple devices is staggering. Phones are powerful computers and cars increasingly have become so advanced they communicate with mobile devices. For the modern business person, there is no way to overlook the importance of this rapid progress, particularly if we want to do utilise the best tools.

These tools matter to everyone, not merely business people. But it is business people who can benefit most.

What are communication tools?

Before knowing which ones to choose, we should understand what these tools are. Communication tools include such things as phone systems, a company email hosting provider, proper website platforms, a file-sharing system, a CRM (customer relationship management platform) and, of course, a project management system. As Forbes notes, it doesn’t matter how big the company is, the tools matter:

“Whether you’re a startup or a Fortune 500 company, every business needs to communicate effectively with their clients, employees and vendors.”

Communication is key to anything and everything. Bad communication can result in complete business failure, as customers are not informed about the business. This can mean everything from not knowing about our existence to being misinformed about product delivery times. Everyone having the same information is precisely the end goal of all good communication. This leads to sales, since customers know exactly what they want and what we offer.

What are the best communication tools?

There are a range of options because there are a range of tools to consider.

Google Apps

Google’s wide ranging apps all sync up with one Google account – this means if we use a Google account on our phones or desktop, all the information will be the same. This makes it ideal for collaboration, as we can see in real-time when updates occur and get instant notifications. The apps work with a wide variety of formats, from Word documents to Excel spreadsheets, so that everyone can be – sometimes literally – on the same page.

Office Suite

The move to cloud-based software and technology has resulted in many people being left behind. If we want to be as effective as possible, we should consider those companies that operate within cloud-based operations. OfficeSuite offers a range of solutions for various businesses of different sizes. Their effective, secure phone system is ideal for the modern digital business.


Tired of explaining the same situation again and again to different colleagues? TeamViewer allows anyone access to desktops, applications and data, meaning we can skip explaining these issues, reduce miscommunication and decrease time wasting. Sometimes less explaining is better communication.

Of course, none of these tools are useful if we’re not skilled at communicating in the first place. Tools can only do so much. We should also perhaps seriously consider communication courses if we are serious about making our business as effective as possible.  

(Image credit: Microsiervos / Flickr)

6 things you can do that don’t need any talent

writingWhen you’re young and in your first job, it can be tough to make a good impression on your employers. Let’s be real, you don’t really know what you’re doing, you’re sure that you’re messing up every task and you feel so confused about everything going on around you. But the good news is there are thing you can do that don’t need any talent. These are the things that you can do which are sure to impress.

Being on time. It takes almost no effort on your part to be on time. Be at the office at the time you’re expected to be there. Be the first to arrive for a meeting. And, importantly, show up when you’re supposed to for your job interview. All of this makes an excellent impression and will be noticed. Set your alarm, get a good night’s sleep and get to work when you need to.

Working hard. You might not be the best at your work yet. But you can work hard. You can show that you’re happy to be there and happy to do the work.

Positive body language. You’d be surprised to learn how much you’re communicating without saying a word. Think about the signals your body is sending when you’re at meetings, chatting to colleagues and even standing at the coffee machine. You want to appear friendly and engaging, not rude and closed off.

Enthusiasm. Do you smile at colleagues and greet them when you walk past them? Or do you fail to make eye contact and walk around in silence? All of this is important to think about. Employers don’t appreciate the silent staffers who appear unhappy to be there. They want to see workers who actually seem to want to be there.

Willingness to learn. You’re young. You don’t really know what you’re doing. So you need to put in additional effort and show that you’re willing to learn. Whether you’re putting in some extra time to learn coding or asking a colleague to teach you the ins and outs of applying for equipment finance, showing that you want to learn is always a good trait when you’re in the working world.

Doing that little bit extra. This can mean anything from putting your hand up for additional work, jumping in to wash the coffee cups or offering to go to the shop to buy milk. What’s important is that you aren’t afraid to work hard and you aren’t afraid to let your colleagues and employers know that.

How to attract customers to your restaurant

foodThe best way to successfully target the right demographic to your restaurant is by using the most appropriate advertising methods. Your marketing strategy will determine whether or not you attract the right target market. Take careful consideration of the location of your restaurant, the ambiance, menu options and pricing as it will influence who you attract. Implement marketing strategies that will attract your desired demographic.  

Choice of menu and services

The range of meals on your menu, your prices and operational hours should cater or appeal to your target market. If you have a family styled restaurant, offer a range of low to mid cost food choices. Your menu should also include child-friendly items such as burgers, pizza or simple pastas. If seniors mostly frequent your restaurant offer familiar meals and large-print menus. Young professionals will expect a greater variety in menu choices. They will expect a wide range of mixed drinks and wine, along with trendy appetizers and desserts on your menu. In this case be sure to have extended hours for your establishment.

Decor and style

The style of your restaurant will need the right ambiance to attract the right demographic. For a sports bar you’re going to need home-town team paraphernalia and large television screens to watch sports. When it comes to fine dining you may need to upscale to attract older clientele who prefer an intimate dining experience.

For a family style restaurant you’re going to need decor which will also have a lasting impact for children as well as older people. Bright colours and comfortable seating usually appeals to children. Add colouring sheets and you have a winner for little ones. Your decor, music selection and the volume will be vital in attracting the kind of diners you want to frequent your restaurant. Have your demographic in mind when choosing lighting levels, seating options, taste and comfort.

Strategic targeting

Human resource management courses will teach you how to deal with employees, but what you also require is a study on your patrons. Thoroughly researching your demographic will give you insight into the best way to market to them. Advertise in places your potential customers live and work. Also make use of the media your demographic commonly uses. If you’re catering to senior citizens, your advertising won’t be the same as targeting a younger group of people. Print ads in local newspapers to reach those you know aren’t active on social media. Provide a free kids’ meal each night of the week for busy families.

A crash course in logo design


Many entrepreneurs who start their own business already have their plans sorted. They set a goal and aim to achieve it. They could have a brilliant concept going and their selling strategy may be on point, but their branding could be lacking. The branding of your company separates you from your business. Essentially your brand will form its own identity as it starts to live in the hearts of your customers. Every business owner wants a brand which is memorable and draws attention.


Logo design


Choose a minimalistic approach to your logo design as these are often more memorable. A busy design won’t have one focus point. Think about your logo design in this way, out of seven different colours you’re instantly going to remember the first three colours, not all seven. Don’t go overboard with the design. Your logo is how customers will be able to identify your brand, setting you apart from the rest of your competitors. This is ultimately what you were possibly taught in your business school sales and marketing courses. Your logo is your marketing tool which is going to drive your sales.


Have a look at your competitors


Have a look at the logos of your competitors. You’re not going to mimic what they have as it would be an infringement on their copyright. Once you have a list of all the different designs, see whether any of theirs spark your own ideas.


Consider your target demographic


Your company logo needs to resonate with your target market. Avoid designing a logo which won’t necessarily appeal to your audience. If your business provides spa treatments, your logo should portray what a spa represents.


Be creative


Don’t neglect the fact that your logo still needs to captivate your audience no matter how minimalist it appears. Get creative with different shapes and sizes as you feature a unique look which compliments your brand. The great thing about a unique brand is that you’re able to have a backstory as to why you’ve chosen a particular logo design.


Consider all aspects of a logo

Think about the message you want to convey with your logo design. Your logo should be perceived with positive connotations and not influence scepticism. Your brand tells your story for customers to have a sense of who you are and whether they can relate to you.

What Brexit means for investors

coinsSo, on June 23rd 2016 Britain decided to exit the European Union (EU). This move has been called “Brexit” and when it happened it shook the world. It also seemed to happen really quickly and out of nowhere.

While we still wait for the defined outcomes of what Brexit actually means and what changes to expect, many are concerned and speculate that we could very well be faced with a negative global economic impact. some, however, think this is the belief of naysayers and that the effects could be positive in the long term.

Things went pear shaped immediately but all is not lost

The immediate effect was that stocks fell, predominantly in the U.S. and Europe. However, long term effects might be that Britain will no longer be operating with the restrictions of EU and have to pay related expenses. As an independent state, Britain can create regulations and policies that are specifically suitable to their needs. And, there are many who believe that every country should operate independently of any unions or the like.

Brexit presents opportunities too

There are many financial gurus and money managers who believed Brexit would cause a series of immediate problems for investors. However there are many who’ve contradicted this belief and are of the thought that there are now Brexit investment opportunities. Brexit supporters are keeping alert and watching the markets with a magnifying glass but they’re remaining invested. In other words, don’t run and hide with your investments just remain aware as there may be some geopolitical shocks that come about.

This is a big deal for Africa’s relationship with the UK

Africa in particular has a long-standing history with the UK. Many South Africans have roots in Britain due to previous members of their family having been born of British descent. Also, many Africans have immigrated to the UK but they still have family who live in Africa. In the early 2000s many young South Africans scrambled to get working visas so they might secure a career and future in the UK and they’re still there today. Because it was the easiest place to immigrate to. And on the political and business front, trade agreements between the UK and various African countries are strong and significant to both parties. So Brexit and all other politics or changes in various policies really matter to the African continent.

South African finance experts have weighed in on the subject matter many times after it happened

Shortly after Brexit happened, ratings agency Moody’s weighed in on the subject of investment and Brexit. They noted how South Africa is the most exposed country in Africa to experience the shockwaves from Brexit. And even though the rand and the JSE have returned to their pre-brexit levels, South Africa operates with an account deficit. This debt could leave the country vulnerable when it comes to any capital outflows.

Also, thwarted growth in the UK is likely to affect SA negatively, even if only slightly. Moody’s states, “Although we expect that SA will avoid a recession in 2016, the speed of any likely economic recovery and medium-term growth, which are already constrained by structural impediment, could be adversely affected if Brexit were to lead to increased risk aversion and reduced investor appetite towards emerging markets.”

Finance minister, Pravin Gordhan, also had some thoughts on the topic when he spoke to Bloomberg TV in London: “These things are all relative. When you have the extreme uncertainty of right wing populism and other political developments in the European context, then we actually look relatively stable and a good place to be in.” Minister Gordhan believes that Brexit assists with making South Africa an ideal investment destination. He went on to list his three top reasons why he believes this, “Firstly, because South Africa has the best business infrastructure on the African continent. Secondly, because we have many South African firms that have an excellent penetration in the African market. And, thirdly, because Africa for the next 20 years is the world’s future in terms of growth, in terms of demand, in terms of the demographic dividend.”