It is no secret that as South Africans we are facing tough times. Because of this many people have become dependent on unsecured debt and more specifically ‘pay day’ type loans to get by. You may be one of many that are ‘sandwiched’ by debt, because you have to support not only yourself and your children, but also your parents. It is important that you understand that you are not alone. There are a number of social and economic factors that are contributing to the financial pressure that you and many other South Africans are feeling.
26 November 2012
Are you thinking of starting to save but not sure where to start?
DebtBusters offers advice to get you into the savings habit and make sure it stays that way.
The consensus is to start small. Luke Hirst, MD of debt experts Debtbusters, suggests that you save 8 percent of your net income, but maybe that’s a tough goal at this stage. Don’t give up just because you can’t save that much, if it is R20 a month, then that is still going in the right direction. Starting a savings habit and saving consistently is the key objective.
- Start with a small amount you know you can live with, perhaps a few hundred Rand a month.
- If your company doesn’t have a compulsory retirement plan set up, ask them to set up a voluntary plan for you. The money taken off your salary every month will soon go unnoticed and you get tax back.
- Keep an eye on your ATM withdrawals. A great way to do this is to decide how much you will take out each week and make it last. Make it a little tight and attempt to decrease it over time if you can. If you have money left at the end of the week, put it into your savings account and choose one with the highest interest.
- Pay off all your credit and store cards. Begin paying extra every month on the card with the highest interest rate. When it’s paid off, move to the card with the next-highest balance.
- Set up a long term investment plan. You can have as little as R150 a month debited from your bank account and deposited into a unit trust fund.
- Once you’re on the right path to being savings savvy, it’s time to think about how to earn a better return. One simple way to do that is to take some money from your bank savings account and invest it into at least two different unit trusts. The funds you decide on will be determined by your risk profile. The higher the risk the higher the possible return.
- Re-evaluate your insurance policies at least once a year. You may be paying for services you no longer require or paying into non-performing investments.
- Negotiate. This is the key. Do not just accept the terms of certain agreements. You have the leeway to negotiate before signing certain agreements.
- Save for a rainy day. A rule of thumb is to always have three months of your salary in a savings account to avoid any unforeseen circumstances. Sticking to this will also give you financial peace of mind.
- And finally, account for your money by budgeting. People who know where their money goes spend far less and save more. Keep a little notebook with you to record your small cash purchases as these do add up.
Should your spending get out of control you can contact DebtBusters for advice. Call us on 0869 99 06 06 or visit our website www.debtbusters.co.za.