Let’s face it whether you’re in debt or not we could always use some extra money at the end of the month, to put away for emergencies or for the future, but this is easier said than done. For many South Africans saving money isn’t something they think about or its thought of as daunting and sometimes almost impossible task. To truly be effective at saving money needs to become a habit, a ritual you do without even thinking about it. But to do that you need to replace your current bad financial habits.

So how do you know if you have bad financial habits? Well here are a list of the 10 most common bad financial habits South Africans tend to have.

Habit no. 1: Not having well-balanced spending

Have a look at your current expenses and see how many of your current expenses can be avoided. How many are actually wants and not needs? Things like clothing accounts, a second cell phone contract, satellite TV, nights out, holidays and luxury purchases are often seen as needs or justified as needs when in fact you could easily live without them. Especially in times when you need to scale down. Have a look at your monthly purchases and you may be surprised at your spending priorities.

Habit no. 2: Not having a budget

Setting a budget not only puts you in control of your spending but gets you into the habit of limiting your spending as well as getting used to the flow of your money. By living on a healthy budget you’ll be able to reach all of your financial obligations without stressing every time you swipe your card. Living on a budget doesn’t have to be a punishment. Budgeting can help you identify unnecessary expenses, save more and worry less. Don’t work harder – work smarter.

Habit no. 3: Not checking your bank statements

Going through one’s bank statement once a month isn’t something that excites a lot of people. It could, however, mean the difference between a good and a bad financial month. It is very important to know about each and every debit order that goes off on your bank account. You could very well be paying for something that isn’t yours or something you don’t need.

Start to familiarise yourself with the cost of transaction fees on your bank account. You could save money just by moving debit orders to accounts that charge less, knowing whether to swipe or draw and making payments from the right accounts.

Habit no. 4: Falling behind on payments

The moment you fall behind on payments, you are at risk of becoming over-indebted. Each month the amount of debt that needs to be repaid will become even larger and eventually unattainable. This will leave you with huge amounts of debt that just keeps piling up.

Habit no. 5: Paying debt with debt

While this can be an effective way of managing your debt for some people consolidating your debt into one montly payment without the proper advice or due dillgence can leave them in an even larger financial hole. If you’re looking to consilidate your debt make sure the new debt amount and interest rate coupled with repayment is a reduction on the cost that you would have incurred should you have stuck with paying off smaller loans individually over time.

Habit no. 6: Paying back debt late

If you have no money troubles but pay your bills late, your credit score will drop. That means current creditors can raise your rates or cut your credit lines, and future creditors can offer higher rates or deny you. So even if financial problems didn’t cause your late payments, those late payments could trigger financial problems, especially when late-payment fees kick in.

Habit no. 7: Taking out pay day loans

Payday loans are quite possibly the most dangerous financial decision that a person can make. Once someone gets sucked into the payday loan cycle, it’s hard to get themselves out bar some sort of intervention. They often need the next payday loan to help pay for the last one and this endless cycle of mounting interest will quickly rack up your debt until it’s completely unmanageable.

Habit no. 8: Using credit without understanding how it works

Some people don’t realise that products bought on credit could cost you more than twice the original price. It’s much smarter to save for the products you really need and to buy them once off. Make sure you understand how the interest rates work on the credit agreements that you enter. You might just realise that it isn’t worth the risk.

Habit no. 9: Not saving for emergencies, retirement and education for your children

These savings tie in with your monthly budget. Not saving for emergencies could ruin your entire budget. It’s important to save for expenses that happen unexpectedly. Create an account for each one of your children and start saving for their education as soon as possible. It is compulsory to put away a realistic amount for retirement every month. Start today! Saving is a lot less stressful than running out of money.

Habit no. 10: Not Tracking Expenses

Many small expenses can add up to a lot of money at the end of the month that can easily eat away at any budget. For example, that R30-per-day coffee habit, or the R400 per month gym membership that goes unused, or the R100+ charges for apps, music, or movie downloads those small charges you forget about can quickly reduce your disposable income. Those small expenses could have been put to better use in a savings account or helped you pay off you’re debts faster.

Debt Review Solutions

For some people changing their habits simply isn’t enough to get out of the financial deficit they find themselves in. Fortunately, there are solutions if this is the case. If you are having difficulty covering all of your debt payments each month then consider requesting debt review with us at ezDebt. Our trained consultants can help yo reduce your instalments, protect you against legal action from Credit Providers, provide you with a manageable repayment plan and reduce your financial worries.

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