So we’re heading into the end of the year where balancing your paycheque becomes even more important and will take plenty of strain. Holiday’s, Christmas gifts, back to school preparations and more can really put a dent in your budget as well as rising petrol prices and increasing consumer debt and increase in living costs.
South African consumers can no longer throw caution to the wind and need to be more strategic with their spending. So how do you navigate this time of year without being broke or worse getting stuck in debt? Check out these 10 tips.
1.First things first: get rid of debt
Make sure to pay off the most expensive debt first. This is the debt that carries the highest interest rate and is costing you the most. For example, if you have a bond at a 10% interest rate and a personal loan at a 20% interest rate, consider paying off the loan first.
2. Cut your costs
This isn’t about scrutinising every cent you spend but rather establishing spending patterns to identify possible areas for saving. A good way to do this is to look at your monthly bank statement and see where most of money is going. You may be surprised at just how much you’re spending in certain areas and how by making small changes you could keep your spending in check.
3. Less is more
Examine your monthly budget and if your expenses exceed your income, cut out things you can do without. Just like cleaning out your closet or selling old equipment that is taking up unnecessary space, try to eliminate all expenses and purchases that are not essential. Be very clear on the difference between needs and wants.
4. Remember your saving goals
If you didn’t stick to your New Year’s resolution to save more money this year, it’s not too late to start now. Make a plan to set up a monthly debit order to an investment account or open a tax-free savings account, increase your pension fund contribution and request the 13th cheque option from your employer, if available to you.
5. Save for the unexpected
The amount you save towards an emergency fund depends on your personal circumstances. Ideally an emergency fund should cover three to six months’ living expenses, says Steward, adding that while this might seem like an insurmountable amount to save, just by putting aside R250 a week, for example, you have yourself R1 000 at the end of each month.
“If you don’t have savings, you aren’t getting ready for the day when you must pay out more money than you have. This day can come in the form of an unexpected medical bill, or family emergency, and it is at times like these that your savings can save you,” Manyike points out.
6. Track your spending
Try establish where unnecessary spending goes and how you can reduce it by making small changes to save big. Keep track of expenses in your statements and find a pattern to re-strategise saving methods.
7. Outdated fees must be phased out
You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. End subscriptions and use the money in more efficient places.
8. Payments that don’t reap rewards
Always read the fine print or terms and conditions when it comes to gaining loyalty points from reward programmes. Falling for a quick programme can have you overspending for smaller returns. Sometimes it’s just not worth it.
9. Know the money lingo
Research, read and seek advice on the best methods to save your money and make it go further for longer. Understanding investments, pension funds and the best account to save and spend your rand can certainly take you a long way.
10. Set out a 3-month budget
Create a budget and add your income for the next 3 months as well as any bonus payments. Then work out your monthly spend and what you have for additional spending and rather allocate that additional spend to savings. It may be a thin holiday season this year but don’t let it continue year after year.
If during your calculations you find that there would be a shortfall and how you can either reduce or how you will need to plan to finance the shortfall without putting yourself into a debt cycle you cannot get out of.
More helpful advice
If you found this post helpful you may also enjoy the following posts:
- 8 Money Mistakes The Middle Class Keep Making
- 10 Ways To Stretch Your Holiday Budget
- 10 Tips For Surviving Recession
Manage your debt effectively
If you’re feeling overwhelmed by your current financial situation, feel free to contact us. To Speak to one our consultants about debt review contact us here.