Save more. Invest more. Budget better. These are just some of the common phrases that are used when it comes to making the most out of our finances, but the reality is that many South African's are already struggling to make ends meet as is.
So, how do we shift our perception of money by making the most out of what we have financially? Here are six practical ways in which you can make the most out of your finances.
The key aspects of getting the most out of your finances
Your financial journey is different from the next person's. Therefore, seeking financial advice from an accredited financial advisor will help you set realistic financial goals that keep you motivated. The key aspects of making the most out of your personal finances is to:
Include unexpected expenses in a budget
If you do not have a budget in place, it's best to do so immediately. Not only will this help you keep track of your finances, but it will also let you see where you could be bleeding financially.
However, when creating a budget it is pivotal to look at your bank statements to see what you are really spending. Cut back where possible on things you do not need or try to find an alternative affordable version.
Don't forget to include some room in your budget for things like unexpected expenses, entertainment, and data expenses. Doing this will help you avoid stepping outside of your budget by keeping you motivated to stick to your budget.
Avoid taking on new debt
There is such a thing as good debt that can be used to improve your financial situation. However, taking on more debt than what you can afford is the easiest way to fall into the red. According to Debt Rescue, there are 85% of South Africans that need help financially.
With 24 million credit card consumers trying to make ends meet, taking on a new loan or credit can be the final blow to many budgets. Always assess if a debt is sustainable and adds value, more so when it comes to the interest rate. Always compare your options before signing your name on the dotted line.
Ideally, your loan or credit card should complement your finances. Meaning, it should be something that you can afford to meet the monthly repayments. Whenever possible, pay more than the minimum amount that is required to reduce it quicker.
Plan your big-ticket purchases
From buying a car, putting a down payment for your new home, or getting a new phone that comes with a hefty price tag, planning your big-ticket items will be a big save later on.
Any purchase that will take a considerable chunk out of your budget is better planned for. It will buy you time to save and also search for better deals that you wouldn't spot on a fast purchase.
This will also allow you to assess if you really need what you are about to purchase. Keep in mind that you want to give yourself and your money breathing room to think before spending it. The upside to doing this will also make sure that you do not miss out on paying other bills that are just as important.
Always remember to protect your financial future. One thing that the COVID-19 pandemic has revealed is that it is better to be prepared than to be financially exposed to the curve balls that life throws at us. Make sure to have financial safety nets such as life insurance, income protection & disability plans that can protect you and your loved ones when you need it the most.