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South Africans are among the worst savers in the world. Survey after survey, report after report point to the undeniable fact that the average South African is just not putting money away for their future.
If you’ve survived Janu-worry – everyone’s toughest money month after the festive season – you’re likely looking for ways to take control of your personal finance this year. February is the ideal time of year to have a long, hard look at your finances and make some responsible decisions. These tips are easy to implement and could help you have your best financial year yet.
Create a budget
The word budget tends to terrify people. But it actually doesn’t deserve its negative reputation. A budget can actually be incredibly positive, allowing you to achieve your goals and attain eventual financial freedom. Having a budget – and sticking to it – will ensure you save more and spend less. Creating a budget is one of the most important things you can do to take control of your personal finance this year.
Pay off your debts
Credit cards, personal loans, store accounts and even bonds all cost you huge amounts of money each month. These debts are quick to multiply and get out of hand. Paying off these debts will give you some much-needed relief in your budget. Now is the time to create a plan to get these paid off as quickly as possible before you find yourself in debt counselling.
Start an emergency fund
An emergency fund is essential for absolutely everyone. You never know when something might happen – cars break down, geysers burst, people lose their jobs or become ill. All of these are terrifying to think about but if you have money saved up for this purpose, they immediately become manageable. Experts are divided in their opinions of just how much you should save in your emergency fund. Some say a minimum of three months, others six months and some even recommend up to a year’s worth of savings.
Strive to spend less
Most articles about spending less recommend you trim the excess from your budget by cutting cigarettes, coffee and lunches. But this isn’t going to make a big difference to your spending. You should really be looking at the biggest costs in your budget – typically your housing and transportation. This is where you can make the most difference to your saving with minimal effort. Next, look at your regular expenses which you hardly notice anymore. Is there any way these could be reduced or cut completely? Do you really need that expensive cell phone contract or satellite television? Could a phone call to your insurance provider result in that cost being slashed? If you make these changes, you could make a big difference to your monthly expenses.
Aim to save more
The key to making all those changes in your spending is to save that additional cash. If you don’t immediately put away the money you’ve saved on your insurance and cellphone bill, all of that work will have been for nothing. Opinions are divided on how much you should be saving. From the conservative 10% to the ultra-frugal 50% of your salary, financial advisors can’t seem to agree. But what they are quick to agree on, is that you should be saving as much as you comfortably can after looking at your budget.
Making these simple changes could have a massive impact on your financial future. Take the time to implement these changes now and you’ll be well on your way to a strong financial future.