5 financial faults for South African consumers to avoid in 2013

As the New Year commences, it is important to acknowledge the key financial faults that South African Consumers make each year, which are detrimental to their current and future financial situation. By avoiding the following faults, you can sustain your financial security and avoid the possibility of accruing debt.

1. Don’t forget to draw up a balanced financial budget

Only a small amount of 5% of South African Consumers measure their financial situation and household expenses. The way to getting your financial situation in order is through positive cash flow, which starts by implementing a budget. It is important to plan how you use your money. However this cannot be done if you do not know what your income and expenses are.

Budgeting will prevent you from spending money which you do not have, as well as allow you to pay off your debt faster and manage your finances. Failing to draw up a budget may result in financial difficulties and having to borrow money in order to get by. Drawing up a budget isn’t difficult; however it may take a while for it to balance.

Optimally, aim to get on top of your finances by making sure your expenses are less than your income.

2. Don’t forget about the future

It is important to always think about tomorrow. Many South African consumers take their income for granted and fail to save for a day where their financial situation may be at risk due to factors such as unemployment, illness, disability, etc. It is important to save regularly to prevent having to borrow more money in order to buy basic necessities.

Many South African consumers find it hard to save as they are simply living to get by today. However in times of a crisis, it is important to manage to keep a balance between what we may need today and what we may need tomorrow. In order to maintain a stable and stress free lifestyle, financial planning and discipline is the key.

Start a savings account that disciplines you to put aside money regularly and be cautious with your cash. For information on various savings products please visit www.justmoney.co.za

3. Don’t default on debt repayments

A default on payment can be explained as a situation whereby a consumer fails to meet a debt repayment obligation after entering into a specific agreement with a credit provider.

It is important to consistently review your financial situation and if you feel that you have a high possibility of defaulting on your debt repayments, contact your credit provider beforehand and make arrangements that will comply with your finances. Defaulting on a payment may cause your credit provider to take legal against you, which will also result in increased legal costs and interest rates, consequently producing further financial difficulties.

For financial advice on how to manage you debt, visit www.debtbusters.co.za, call DebtBusters today on 0869 990 606 or email info@debtbusters.co.za.

4. Don’t cancel insurance cover

It is imperative for South African consumers to plan a financial budget that incorporates all their insurance cover. Due to the fact that we can’t always predict the future, it is vital to make sure you are covered properly. In the event of your death, life insurance will guarantee that your designated beneficiaries will be paid out a certain amount.

Your vehicle and household insurance covers will protect what is most likely to be the biggest investments you will make in your life. In the event of a car accident or burglary, it may take a long time to resume your normal situation if without insurance.

Although insurance covers may consume a significant amount of your financial budget, it is important to make sure that you don’t cancel your insurance covers completely and rather enforce that you have the best and most affordable covers.

InsuranceBusters, offers a range of tailored short and long term insurance products that will suit your financial and personal needs! For more information visit www.insurancebusters.co.za or call 0214811700.

5. Don’t take on too much credit

South African consumers fall into financial trouble and accumulate debt due to taking on too much credit. It is essential to remember that there is a difference between good and bad debt.

• Bad debt is the type of debt you take on when you buy something to consume, through the use of store cards, car loans, etc.
• Good debt enables you to enhance your overall financial wealth such as a student loan or home loan.

It is very easy to accumulate debt due to taking on too much credit. Many South African consumers obtain more than two store cards or credit cards and therefore pay large amounts of money each month on high interest rates.

Do not take on too much credit and try to always have good debt, if any at all. This should ensure that you maintain a healthy and wealthy financial situation.