Managing your finances amidst rising economic pressures calls for level-headed decision-making and effective planning!
Considering the inevitability of interest rate hikes in the coming months, clearing debt should be a top priority. Although it may seem counter-intuitive in an uncertain economic climate, those consumers who have access to savings should seriously consider using a portion of it to settle their debt - particularly those with high interest rates - or to reduce the capital amount on home loans or car finance. Lifting this burden is guaranteed to have a positive effect on your finances and stress levels. As soon as debt has been significantly reduced, focus on restoring savings and creating a conservative-moderate investment portfolio.
Curb unnecessary household spending and reduce monthly entertainment costs. Simple cost-saving techniques should be implemented. Sourcing groceries locally, and keeping an eye on price trends and specials are effective ways to monitor and subsequently reduce monthly spending. Many stores offer discounts when buying in bulk. However, some consumers prefer to buy groceries only when necessary to discourage wastage and splurging on unnecessary items. Others take advantage of money-back promotions and discounts such as the PnP SmartShopper or Woolworths WRewards. Use whatever means necessary to clear debt, and increase the amount of disposable income available in order to save. Consciously revise and assess every item in the monthly budget from month to month – this practise will ensure a degree of accountability towards unnecessary spending.
As far as possible, avoid being pressured into taking additional gap cover or applying for any new loans – the focus should be on managing existing financial responsibilities rather than adding to them. Maintaining a healthy credit payment rating is essential! This will ensure that debt is significantly reduced to free up disposable income, which should be used to save or invest.
Many consumers, who are not currently putting effective cost-saving practices in place, may become overwhelmed with financial commitments as SA’s economy continues to perform poorly. Defaulting on monthly instalments will adversely affect a consumer’s credit rating and cause financial institutions to look unfavourably on future loan applications.
South African’s are cautioned to remain level-headed and implement careful financial management strategies in the coming months. Adopting a frugal attitude towards spending, saving and investing may be what sees South Africans through this trying time.