It’s hard not to live on credit - many South Africans have been forced to do so in these times.
However, if you use this practical knowledge below sourced from experts, you could in fact be saving money for the future.
Being savvy with your money, they say, can help you prepare for unpredictable events or save for wonderful events such as a holiday as well as secure your financial future.
Here’s how you can be savvy with your money:
1. Budget
A budget is a great way to keep track of your money and monitor your spending. You can choose to do a monthly or weekly budget.
When you draw up your budget, list your expenditures, monthly deductions and income. If your total expenses are more than what you earn, you need to look for ways to reduce your spending. Make sure you leave room in your budget for savings.
2. Emergency fund
Kathryn Mains, founder of Money Savvy Humans, stresses the importance of having an emergency savings account.
“My suggestion would be that you have 12 months worth of living expenses saved up. It’s impossible to know what curve-balls life will throw at you, but you can plan for the worst and hope for the best,” Mains said.
You can start an emergency fund by:
– starting small, even a few rands stores away every month will add up; t
– setting up a savings account you can automatically transfer money into when you get paid.
– Trying to save at least 10% of your total earnings.
3. Seek financial advice
According to Paula Walker, a director and advisory partner at the Consolidated Wealth Group, a financial adviser helps you focus on the big picture and will build a portfolio to match your goals.
"People should think of a financial advisor as their own personal trainer, someone that will guide them and keep them motivated about financial planning,“ Walker said.
4. Manage your debt
Debt may seem like a never-ending hole that you cannot get out of. If you don’t know where to start, you should start paying off the debts that cost the highest interest rates first. You should also speak to a qualified debt counsellor who can help you set up a debt repayment plan.
5. Pay with cash
It is important to remember that if you can’t pay for something with cash, then you can’t afford it.
Only use your credit card for emergencies and pay for items with cash or a debit card only. By doing this, you are living within your means and not getting into unnecessary debt.
IOL Business