If you broke your December budget and JanuWorry bills are weighing you down, you’re not alone. TransUnion’s ongoing consumer study reveals more than half of South African households are still being impacted by the COVID-19 pandemic.
It’s not easy finding ways to pay for loans, education, clothing accounts and mashonisa (informal and\ or unregistered credit providers), along with all your other bills. So, TransUnion put together some pointers to help you effectively plan your attainable and sustainable journey toward financial freedom in 2022.
Though some of this advice may seem fairly basic, these steps will help you stick to your budget and repayment plans so you can take control of your financial health.
List your monthly income against your fixed (home loans, school fees and credit card payments, etc.) and variable (groceries, dining out, medical care, entertainment, transport, etc.) expenses. This helps you see where you stand financially. By eating in as often as possible and creatively cutting back on entertainment by finding different activities or new hobbies that are low cost or free, you’ll have more cash on hand.
Make saving an important part of your routine. Putting away even the smallest amount — and even setting up an emergency savings account for unexpected crises — is smart and healthy. You can consult with your financial advisor, close friend or mentor, or inquire with your bank about available savings plans. It’s best to choose a plan that doesn’t weigh your finances down. You’ll be able to gauge this better after drawing up your monthly budget and seeing what amount you have left. There’s a common rule that advises saving at least 20% of your income. However, you may wish to increase or decrease this percentage (to even 5%) to best align with your personal finance basics.
Avoid paying high interest rates in 2022, and thoroughly analyse your debt portfolio. This will be a detailed list of all your debts on a spreadsheet or table on any document. List your debts from the highest to lowest amount and always start off by paying your “big-ticket” items down to your minimum monthly instalments. Prevent any defaults or judgements by communicating with your lenders; inform them if you won’t be able to make your payment or at least negotiate to pay the required minimum instalment. It’s best not to skip any debt repayment as this may negatively affect your credit score.
Did you know you’re entitled to one free copy of your credit report every 12 months from TransUnion? Your credit report is a record of all your financial behaviour for the past 24 months. It shows your payment history, that is, open accounts in good standing, as well as late payments. This information helps you make better-informed decisions on how you should approach your credit profile. Get your annual free credit report from TransUnion today.
Taking control of your financial commitments and paying them off slowly is extremely empowering. But in order to attain financial freedom, you may need to curb certain spending habits or spontaneous retail behaviours. Just remember, not all change is bad. For instance, you could freeze your gym membership and join a free running program in your neighbourhood park. You might try learning a new skill with the plethora of free online courses available. And above all, when making larger purchases, be sure you’ve saved up and are totally ready. By sticking to your monthly financial commitments, you’ll be better equipped to meet your new year’s goals of being physically, mentally and financially fit. It takes dedication and restraint, but you can do this!
By genuinely understanding your current financial position and effectively planning how to better manage your spending and saving, you can lighten your stress. And now is the perfect time to start.