As times change, so does common knowledge about money. Unfortunately, we in South Africa are quite behind the rest of the world when it comes to understanding the unwritten laws of money management. this is according to recent findings by Wonga SA after they collated data surveying the state of financial literacy in our country.
Did you know that a frighteningly large segment of our earning population is neck deep in debt and that many of them live entirely on credit in its various forms? Many South Africans today have little to nothing left shortly after they receive their salaries and are thus forced to take out loans in order to meet basic living expenses. And since each following month entails paying off the loans, the vicious cycle of lingering debt never comes to a close.
It is estimated that the average individual will spend over R2-million in their lifetime on interest charges alone. It’s certainly about mindset: Understand why you use credit to support your lifestyle and you should be able to stop bad spending habits. Getting out of debt is the biggest step towards financial freedom you can take.
You can start the process by weighing your personal financial situation in a clear and honest manner. Make sure to leave nothing out of the picture. Start jotting things out on paper if you have to. Assess your assets first. You’ll feel in control once you know where your money is going. By writing down your expenses you’ll soon be surprised how many times you could have saved instead of indulging in unnecessary spending. Even your daily coffee binges add up over time.
There are several ways you can learn to get the most out of your monthly earnings. The least of these is to seriously make saving a priority in your life. So to say, pay yourself first. Incorporate active saving by making it a critical element of your monthly budget plan. Put a fixed amount away every month, and put in a separate account if you are afraid you will spend it.
Tackle your debts before you even think about spending money. That’s the necessary commitment. Remember that credit cards carry the highest interest rates, so you’ll save the most money by working on that debt first. The way to do this is to start with the card that has the most owing, then gradually working down on the debt, and finally finishing it off by cancelling the card. If you have a number of cards, keep on doing this until you have conquered the entire list. You’ll be pleasantly surprised how quickly your mountain of debt becomes a molehill.
Write up a budget. Yes, we’ve all heard it before. Having a quick and ready reference to your actual earnings and expenses will give you a good understanding of how you are spending your money.
Keep up to date with your account payments every month. The key understanding is that it is almost immaterial what you earn; what counts is what you are able to save on a regular basis.
For many seemingly well to do South Africans, the harsh reality is, that while they may enjoy what most would consider decent salaries, they have very little actual wealth to show for themselves in the end.