The South Africa Reserve Bank decision to keep the repo rate unchanged at 8.25% may have South Africans breathing a sigh of relief; however, consumers are still under financial pressure.
Thys van Zyl, CEO of Everest Wealth, said that high interest rates, along with load shedding and increases in the cost of electricity, food, and fuel, put a great deal of pressure on people.
Here are five tips to help consumers stay financially afloat:
Draft a budget plan
The first step to starting a budget is knowing how much money is coming into your household, including your spouse and other streams of income.
Then, create three columns for:
1. Fixed expenses such as rent or bond, levies, school fees, car payments, insurance, and bank fees.
2. Discretionary expenses, including entertainment, fuel, clothing, data, toiletries, and transport.
3. Savings: money that you are putting aside towards a savings goal.
It is important that you stay committed to sticking to your budget plan if you want to reap the rewards in the long run.
Take care of your bills
It may seem obvious, but paying your bills on time every month is important. If you pay late, you may pay a penalty or interest, which will accumulate on your accounts that are already overdue.
Speak to a financial adviser
Lee Hancox, a certified financial planner and the head of Channel and Segment Marketing at Sanlam, said: “Financial advisers are there to help you on your journey to financial confidence, to help you articulate your goals, and to put plans in place to achieve them.”
Hancox said that people should speak to their financial adviser if they are tempted to save money by cancelling or decreasing their retirement savings or life cover contributions. This is a big decision that you need to discuss with your financial adviser to make sure that you have considered all of your options.
Revisit your financial goals
Write down your financial goals and decide which ones you are going to prioritise. Having savings goals will prevent you from being tempted to spend money unnecessarily.
You can have long-term savings goals, such as saving towards a car or a house, and short-term savings goals, like saving towards a holiday.
Emergency fund
You can start saving money in an emergency fund that can be used for unforeseen expenses.
According to Tyrone Lowther, head of Budget Insurance, it’s recommended you have three to six months’ worth of expenses saved up in your emergency fund.
“Start by saving a small amount each month. Commit—don't withdraw anything from this fund unless it’s a crisis,” Lowther said.
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