2015 has been a tough financial year for many South Africans. We have had repo rate increases, load shedding, a drought, a weakening rand, increased food and electricity prices and a shaky economy. There is still a lot of uncertainty and financial stress as we move towards 2016. Now is a good time to work out how to manage debt problems so that you can welcome the New Year with reduced debt stress.
20 October 2016
According to Dave Ramsey, an American financial advice enthusiast, “A budget is telling your money where to go instead of wondering where it went’’. In order to achieve financial freedom, successful planning, budgeting and spend tracking is required. Without implementing an appropriate budgeting and saving strategy, your risk of financial failure increases.
Millions of South Africans are battling to overcome budget burnout, which occurs when one’s income runs out before month end. Consumer’s often resort to taking out more debt to supplement their income, even using expensive short-term debt to pay for basic living expenses.
To ensure that you do not find yourself in financial stress a few days after payday, you need to set up a monthly budget, which is closely monitored and followed. Drawing up a budget requires a lot of discipline, and even more discipline is neededto adhere to it. Sticking to your budget helps to prevent budget burnout and will assist in tracking spending, planning and debt management. Some consumers find themselves with debt problems because they have failed to budget or stick to their budgets.
Below are some tips which can be helpful in combatting budget burnout.
- Avoid Impulsive Buying – All that glitters is not gold. There are certain needs in life and there are also wants.. Luxuries are advetised in such ways as to create impulsive buying. Impulsive buying usually stretches the household budget because it is the purchase of unplanned, and often unnecessary goods. It’s also important to teach children at young age how to draft a budget and learn to stick to it.
- Overcome pressure from Social media – platforms like Facebook, Instagram and WhatsApp are good for maintaining social relations but can create budget pressure if not handled carefully. There is always a temptation to compete with friends and family who post photos on social media platforms of themselves wining and dining and splurging on luxuries.. An attitude of wanting to keep up appearances may lead to buying luxurious things and going to fancy places and capturing moments so that they can be shared on social media platforms to try and impress others. While it is good to enjoy life, you have to be wise and consider your budget before spending on items and outings that do not fit your budget. .
- Saving – This is a very important aspect in budgeting. You can start saving small amounts of money every month. For example, saving R500 every month amounts to R6000 in 12 months. In the event of an emergency, your savings will go a long way.If you have not saved, one may have to consider looking for a loan in order to cover the costs of the emergency. You can start by opening a bank account that saves you on fees. Bidvest Bank Account ™ offers a very affordable savings account with bank charges from as little as R18 per month and capped at R82 per month*.
- Prepare a debt repayment plan – The sooner you pay up your unsecured debt the sooner you save. You need to have a debt repayment plan which needs to be adhered to. The sooner you clear your short term debt, which usually attracts high interest rates, the earlier you can have cash available for savings, investments and even insurance policies.
*All fees associated with the Bidvest Bank Account™ are available at any branch or on www.bidvestbank.co.za. In terms of legislation, proof of residence and positive identification are required to open a Bidvest Bank Account™. Bidvest Bank Account™ is a registered trade mark of Bidvest Bank Limited (Reg. No 2000/006478/06) is a licensed financial services and registered credit provider, NCRCP17. BlastBC 129050