Credit, in conjunction with bad spending habits, often leave many South Africans living from payday to payday. However, it is never too late to take control of your finances and free yourself from bad spending habits.
Recent surveys conducted by Debt Rescue, indicate that 85% of South Africans need help, financially and emotionally as a result of the Covid-19 Pandemic. Here is some advice on how to combat this:
Your money cannot be managed if you do not know where it is going. When was the last time you calculated your expenses? To make changes, you first need to know what your finance situation looks like.
Set a goal
Goals lead the path towards a dream lifestyle. Your short-term financial goals should include:
- Reducing debt
- Setting up an emergency fund
Your long-term goals should include:
- Saving for retirement
- Saving for a planned holiday, or for lifelong endeavours
These goals help you to stay out of debt and allows for maximum opportunities, keeps you on the right path, and helps you avoid short-term spending temptations.
Your lifestyle should match your income
Massive expenses revolve around our home, transport, and entertainment. These areas are the easiest to overspend. Credit cards and debts make it easy to move our lifestyles from dreams to reality. Instead of overextending your finances, control your expenses and se how to afford your lifestyle without the debt.
Create a spending plan for your money
The basics of financial planning is to save before spending. As a starter, it is advised to save 10-20% of your income, thereafter, seeing to necessities. However, if you can save more of your income, it is advised to do so. Additionally, making a few small changes to your spending habits, has a larger impact on your finance. A few changes include:
- Parents should not give in to all their children’s demands
- Cancel all unused subscriptions
- Focus less on luxury brand name items
- Use and stick to a shopping list
- Switch to cash for purchases, not credit
- Move from fear and stress to discipline and gratitude
Your money should not be stressing you out. Being fearful of your earnings, prevents you from reaching your financial goals. Some of these fears stem from not knowing what to do. Speaking to a certified financial planner will help you get a clear picture and take control of your finances to give you the confidence to make better spending and investment decisions. Our financial experts have been unpacking and providing practical advice on the best ways to preserve your financial freedom. Contact our financial advisors to ensure that you are receiving shariah compliant finance advise.
Anglowealth is an Authorized Financial Service Provider (FSP Number: 46755)
(Source: Moneyweb, 2020)