Manage Your Money like a F*cking Grownup

1. Money is Freedom: Design Your Life Deliberately

To have money is to have freedom.

Control your life. Being in control of your money means being in control of your life choices. Every transaction is a journal entry, reflecting what truly matters to you. Since you don't have infinite money, you must be honest about the life you want and direct your resources consciously.

Fight external forces. The world, through advertising and societal pressure, constantly tries to make you buy things you don't need, distracting you from your real goals. Trying to look rich often makes you poor by trapping you in debt for liabilities like cars and big houses. True wealth is having choices and not being forced to work for money.

Dream bigger. Money allows you to spend your time how you want, which is the most precious currency. Imagine your audacious goals – retiring early, taking sabbaticals, pursuing passions – and quantify them. This personal currency helps you evaluate trade-offs and ensures you're not just living someone else's script of adulthood.

2. The System is Rigged, Your Brain is Biased: Understand the Game

Your brain wasn’t designed to deal with money.

Economy is broken. The economic system is rigged, especially against the poor, women, and people of color. Wealth inequality is extreme, and traditional paths to security are less reliable. If you have money to manage, you are already incredibly lucky, but you must understand the systemic challenges.

Brain biases hinder. Your ancient monkey brain is bad at rational financial decisions. It's wired for immediate gratification (temporal discounting), influenced by the first number it hears (anchoring), terrible at assessing real risks (risk estimation), believes in luck (gambler's fallacy), follows defaults blindly (defaults), and treats different money types differently (mental accounting).

Automate and simplify. To overcome these biases, use your rational Adult Brain moments to set up systems that make saving easy and spending hard. Automate savings transfers, set clear rules ("bright lines"), and focus on high-impact changes. Don't rely on willpower; make laziness work for you by setting better defaults.

3. Wealth Comes from Saving, Not Earning

You don’t earn your way to wealth. You save your way to wealth.

Income vs. Wealth. Society confuses high income with wealth, but many high earners are secretly broke due to high spending and debt. Earning a lot won't make you wealthy unless you save a significant portion of it. Conversely, you can build wealth on a modest income through discipline.

Cash flow vs. Balance Sheet. Understand the difference: cash flow is money in (income) vs. money out (expenses); your balance sheet is assets (what you have) vs. liabilities (what you owe). Wealth is built by spending less than you earn and moving the difference to your balance sheet by acquiring assets or reducing debt.

Lifetime earnings. Calculate your lifetime earnings and compare it to your current net worth to see your lifetime spending ratio. This number, the percentage of income you give away, is your new obsession. Lowering it, even slightly each month, is completely within your control and the key to building a healthy asset base.

4. Compound Interest: Time is Your Most Powerful Ally (or Enemy)

Because of how compound interest works, the choices you make now, when you’re young, will have a much bigger impact on your life than the money choices you make later.

Magic of Compounding. Compound interest is the most powerful force in finance. It means your earnings (or debt) start earning (or costing) their own earnings, creating exponential growth like rats on a ship. The formula involves capital, term, rate, and compounding period, but time is the single most important factor.

Start early. Starting to save just a few years earlier can make a million-rand difference over a lifetime. Every year you delay saving costs you far more than the initial amount; it costs you the potential future value that money could have grown to. Don't wait; treat saving as an emergency.

Debt compounds too. Compound interest works terrifyingly fast on debt, especially high-interest consumer debt like credit cards or payday loans. Minimum payments keep you trapped, costing you exponentially more over time. Fees on investments also compound, eating away at your returns significantly over decades.

5. Get Your Shit Together: Track Your Money Relentlessly

You’ve got to have real data.

Know your starting point. Before you can manage your money, you need to know exactly where you stand. This means gathering all the details about your accounts, debts, and spending. Don't rely on memory or guesses; they will be wildly inaccurate.

Build your dashboard. Use an automated money tracking app to gather all your financial information in one place. Supplement this with a spreadsheet to track key metrics like net worth, monthly income vs. expenses, spending ratio, and monthly growth. Update this regularly, ideally weekly for transactions and monthly for balances.

Analyze the data. Once you have the data, analyze it to understand your financial health. Calculate your net worth (assets minus liabilities). Determine if you have a cash flow problem (spending more than you earn). Calculate your spending ratio (expenses divided by income). Identify which spending categories bring you joy (green) and which bring guilt (red).

6. Play One Money Game at a Time Based on Priority

Money management feels hard because it feels like there are a million competing priorities.

Focus is key. Trying to tackle debt, emergency funds, retirement, and special goals all at once is overwhelming. Prioritize your financial goals and focus on winning one game before moving to the next. This provides clarity and builds momentum.

The game hierarchy:

• Game 1: Emergency Lockdown Mode: If spending > income, cut expenses and increase earning urgently.
• Game 2: Build an Oh Shit Fund: Save 1 month of expenses in an accessible account for true emergencies. This breaks the paycheque-to-paycheque cycle.
• Game 3: Get the Fuck Out of Debt: Aggressively pay off high-interest consumer debt (credit cards, store loans, overdrafts). This is usually the best "investment" due to high interest rates. Use the snowball or avalanche method.

Advance through games. Only move to the next game once you've won the current one. This structured approach ensures you build a solid financial foundation before pursuing less urgent goals. Don't feel bad if you're in Game 3; most people start there.

7. Wrangle Your Spending: Tackle the Big Rocks First

You don’t save what’s left after spending. You spend what’s left after saving.

Pay yourself first. Flip the traditional budgeting model. Decide how much you will save or pay towards debt each month, and automate that transfer immediately after payday. Live off what's left. This ensures saving is non-negotiable.

Prioritize spending cuts. Don't waste time agonizing over small expenses ("grains of sand") if your major costs ("big rocks") are out of control. Focus on reducing your largest expenses first, as they have the biggest impact on your spending ratio.

• Big Rocks: Housing, cars.
• Small Rocks: Holidays, major repairs.
• Pebbles: Subscriptions, insurance.
• Sand: Daily coffee, lunches, small purchases.

Use a Fuckaround Fund. Create a separate account for discretionary spending. Transfer your monthly "fun money" into it, perhaps weekly. When it's empty, you stop spending. This simple system provides permission to enjoy spending within limits and prevents accidental overspending on essential bills.

8. Boost Your Income: Invest in Your Skills and Side-Hustles

if I’m honest, when you’re young the best thing you can do for your financial future is invest in your own ability to earn an income.

Skills are assets. While saving is crucial, increasing your income accelerates wealth building. Focus on honing valuable skills that are hard for others to do. Identify your most monetizable and enjoyable skills and work on becoming extraordinarily good at them.

Negotiate effectively. Understand your market value by researching industry salaries and job postings. Talk to colleagues (legally!) about pay. Set clear, tangible goals with your manager and track your performance to build a strong case for raises. Reduce information asymmetry in salary negotiations.

Start a side-hustle. Everyone benefits from a side-hustle. It builds new skills, provides a safety net, accelerates savings, and helps you discover passions. Start small, find one paying customer, and learn to productize your skills. Remember to save side-hustle income aggressively; it's not "free" money.

9. Choose the Right Accounts: Low Fees and User-Friendly

The old institutions haven’t made their processes user-friendly because they want you to use their dumb brokers.

Simplicity and low fees. When choosing financial products, prioritize simplicity, reliability, low fees, and user-friendliness. Avoid overly complex products. Stick with reputable institutions, but don't be afraid to use newer, online-focused providers that offer better interfaces and lower costs.

Bank accounts. Downgrade your main bank account to the cheapest option; fancy cards and perks are rarely worth the fees. Open a separate, low-fee account for your Fuckaround Fund to manage daily spending and prevent overspending on bills.

Avoid credit cards. Credit cards are designed to keep you in debt with high interest and minimum payments. Unless you have exceptional discipline to pay the full balance every month, cut them up. For short-term savings goals (under 5 years), choose accounts with appropriate risk levels and accessibility (e.g., notice accounts or money market funds).

10. Invest Smartly: Passive, Diversified, and Global

If you can’t beat the market, buy the market.

Passive investing. For long-term investing (over 5 years), passive investing is generally the smartest strategy for most people. Instead of trying to pick winning stocks or fund managers (active investing), buy the entire market through low-fee index ETFs (Exchange-Traded Funds). Research shows most active funds fail to beat their benchmark index after fees.

Diversification is key. Reduce risk by diversifying across industries, countries, and asset classes. A global index ETF is an easy way to achieve broad diversification by owning tiny pieces of major companies worldwide. This also protects against country-specific economic risk.

Automate and ignore. The best investors are often those who are lazy. Set up automatic monthly contributions to your chosen low-fee, diversified fund. Avoid trying to time the market or react to short-term fluctuations ("rand cost averaging"). Trust your long-term strategy and resist the urge to constantly check your investments.

11. Insure Against Catastrophe, Not Clutter

As a rule of thumb, only insure the things that could bankrupt you.

Insurance is a bet. Insurance protects you from financial ruin due to unlikely but catastrophic events. Don't insure small, replaceable items like cellphones; the premiums add up and you're unlikely to come out ahead. Save instead.

Prioritize income protection. Your most valuable asset is your ability to earn. Insure against losing this income due to critical illness, disability, or death (life insurance, especially if others depend on you). Income protection is crucial for most young people.

Essential insurance:

• Income Protection: Replaces salary if you can't work due to injury/illness.
• Critical Illness Cover: Payout for major diseases.
• Life Insurance: Payout to dependents if you die.
• Medical Aid/Hospital Plan: Covers healthcare costs.
• Third-Party Car Insurance: Covers damage to others (essential even for old cars).
• Homeowners' Insurance: (If you own) Covers damage to the structure.

Avoid expensive, unnecessary insurance like funeral policies (save instead) or insuring small possessions. Understand exactly what your policy covers and doesn't cover.

12. Build New Money Habits and Review Regularly

Managing your money is going to require a whole set of new habits, which you’re going to need to build into your life.

Consistency over intensity. Financial health comes from consistent, small actions, not sporadic grand gestures. Build simple money habits into your daily and weekly routine.

• Daily: Check Fuckaround Fund balance. Practice gratitude.
• Weekly: Categorize transactions in your tracking app.

The Big Monthly Money Review. Dedicate time each month (e.g., payday) for a comprehensive financial review.

• Check all account balances.
• Update your money dashboard spreadsheet.
• Calculate net worth, spending ratio, and monthly growth.
• Plan for upcoming "planned biggies."
• Adjust automatic savings/debt payments based on progress.
• Review insurance and investment performance (briefly).

Stay motivated. Use your audacious goal as motivation. Forgive yourself for slip-ups ("never miss twice"). Celebrate small wins. If you're feeling stuck or overwhelmed, consider talking to a fee-based financial adviser who acts as a financial coach. Enjoy your life and the freedom your growing financial security provides.

Last updated: May 5, 2025