We are already two months into the New Year, and predictably, most are eagerly making head way on their lists of resolutions, goals and deadlines for the year ahead.
What better time to perform your personal finance audit by tidying up your budget, bank accounts and debts than the beginning of the year.
Nedbank is acutely aware of the escalating demands that weigh heavily on many consumers, including its clients, owing to macro-economic factors including the high levels of indebtedness in South Africa, due to increased pressure from rising food, petrol and electricity pricing among other socio-economic challenges.
It is therefore advisable to seek viable solutions from authourised financial services providers, to guide you during this difficult economic environment. For a long-term solution, a change of behaviour towards spending needs to occur complimented by a savings culture that is embraced by everyone in our society. Start now to plan how to pay off your debt while also focussing on saving and building financial fitness.
The challenge with debt is that it never seems to go away and for most of us it hangs around through most of our lifetime and can potentially derail you from achieving your goals. A debt free lifestyle is within reach once you learn how to manage debt.
Importantly, building financial fitness involves effective budgeting with paying off debt and prioritizing saving right at the top of your list. The aim of budgeting is threefold - to help you tackle your debt systematically, get your spending under control and build wealth.
It is against this backdrop that Nedbank launched MyFinancialLife™, an easy-to-use online personal financial management tool that allows consumers to view and manage their consolidated financial stance. The tool is designed to empower consumers to manage their finances, understand their spending habits, save, and to assist them in achieving their financial goals and aspirations.
’MyFinancialLife™ seeks to empower the South African population to instil a savings culture and help them manage their debt knowing where every cent of their hard earned money is going to,’ said Gavin Payne: Executive Head – Retail Risk at Nedbank.
To encourage kids to save and build financial fitness from an early age working with their parents, Nedbank also introduced MyMoneyMap™, an online personal financial management tool. Both ’MyFinancialLife™ and MyMoneyMap™ are available to everyone (Nedbank and non-Nedbank clients) ”for free”.
Here are several practical ways to reduce debt, avoid debt traps and take control of your finances:
- Calculate the expenses on your list and compare the sum to your monthly income.
- Prioritize - decide what or which things are essentials and which are discretionary.
- Assess each debt, its terms of repayment, interest you are paying monthly and what the debt costs you over it’s lifetime.
- Consolidate your debt where possible - borrow enough from your bank to pay off smaller, more expenses debts in one go - this way you’ll save money and then have only one creditor, the bank.
- Close accounts and tear up credit and store cards as you pay them off to prevent you from re-drawing the credit line.
- If you have financial difficulties, speak to those you owe money to – they will be more understanding if they see you have a plan and are prepared to make sacrifices and they could possibly assist in rearranging or restructuring your debt.
- If you have high debt pay this off first, as the interest you pay on your debt is likely to be higher than any returns you will receive on a sound investment.
- Don't be afraid to cut back –make sure you live within your means.
- Consider a part-time job – it allows for additional cash-flow.
- Use cash instead of credit, research shows this behaviour will help you save 12-18% whenever you shop.
- Ask for professional assistance if you are having trouble coping on your own.
- Schedule a few (inexpensive) rewards to prevent slipping back into old spending habits
- Getting out of debt is not an impossible challenge. The solution begins with the correct attitude and a commitment to resolve or improve the situation, undertaken in small steps that will result in dramatic change.