According to the latest Momentum Consumer Financial Vulnerability Index (CFVI), South Africans were more financially vulnerable in Q4 2022 than they were in Q3 2022.
Therése Havenga, head of business transformation at Momentum Investo, said that South Africans were more financially vulnerable because they were finding it more challenging to pay their bills.
Havenga said most South Africans are forced to spend more than they earn because the cost of living is shockingly high and incomes are not increasing fast enough to keep up with the economic realities that people can’t control.
Here are 7 tips to help people stop overspending:
Track your expenses
In times of economic uncertainty, it is crucial that people are careful how they spend their money and make changes to their spending habits.
Havenga suggests that people start taking a closer look at their bank statements and paying careful attention to all of their expenses so they know where they overspend and where to make changes in their spending habits.
“Make a list of all the expenses you actually need and expenses you can do without. Cancel subscriptions of services you no longer use or even need,” Havenga said.
Consider extra income streams
Havenga said: “Gigging or having a side hustle that you do in your free time while holding on to your day job is a great way to make some extra money. Side hustles can provide much-needed financial relief in these difficult economic times.”
Cut down on entertainment
According to Havenga, cutting a back on entertainment such as dining out and buying takeaways can leave you with extra cash in your pocket.
“Investigate cool and fun ways to let your social butterfly out without breaking the bank, keeping you on the financial straight and narrow,” Havenga said.
Avoid impulsive buying
Buying impulsively can lead to a terrible cycle of debt that most people struggle to get out of.
Havenga said: “Avoid buying items impulsively, make a list of items you need and try your best to stick to it.”
Take advantage of loyalty programmes
Retailers and petrol stations offer rewards programmes that allow you to spend and receive special offers or even cash back. Most loyalty and rewards programmes are free to use and sign up for, so take advantage of these programmes wherever you can.
Consider investing in a retirement product
Havenga said: “While it may be hard to scrape together money for a retirement product, it is important to note that the South African Revenue Service (Sars) offers generous tax deduction when you make contributions to your retirement annuity (RA), pension or provident fund.”
Some products also give you a payment break if you are in trouble, which means that you don’t always have to walk away from it but can take a payment breather if you are desperate. It is vital that you negotiate with your creditor or financial services company.
Have patience
Tightening your belt is not going to change overnight so be patient with yourself and acknowledge that changing your spending habits is an ongoing process. Remember to celebrate the small victories and reward yourself for getting on the right track.
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