“The road to stress-free finance starts with a plan to reduce debt, especially short-term debt with high interest rates.”
This is advice from life insurer Bidvest Life chief marketing officer Zanele Ntulini. But she admits that it’s easier said than done.
“It’s been a stressful few years. First, Covid-19 turned our world upside down. And now, interest rates are rising as fast as the cost of living, making it more difficult than ever to have financial peace of mind. So, how do we reduce our financial stress levels as we enter 2023?
“The first step is to understand why you might be feeling anxious about your finances. For some, it’s an overwhelming debt burden. For others, it’s not having a financial safety net for when things go wrong. Or you could simply be battling to pay your bills every month. But once you know why you’re stressed, you can start planning to fix the problem,” said Ntulini.
Thembani Gomba* is taking steps to deal with the problem.
In 2018, he bought a car and months later, he struggled with making it through the month with his R26,700 salary.
“I had a loan and was paying back about R2,500 every month. The car instalment and insurance went up to R7,500. My rental is R4,600 and I still need to pay for utilities, buy petrol and food.
“For months, it seemed I was drowning in debt. I also have two retail accounts because I love expensive clothes and I did not afford to buy these items for cash,” Gomba said.
But as months went by, he realised that he was not enjoying his money and literally got to the next payday with nothing in his pockets.
“I realised I was suffering. The first thing I did was to stop buying clothes on credit. Now, I budget for things. It could take me two to three months to get it but I won’t be paying any interest on it.
"The sad thing about expensive clothes is that you buy it for R4,000 this week and next month or so, it’s on promotion for half the amount. If I have the R4,000 at the time, I will buy it.
“I have closed my retail accounts but I am still paying them off. I have a credit card and I have given it to a friend of mine to keep it for me. This has saved me from incurring more debt because I would go around buying stuff I did not need,” he said.
He said he is spending far less on clothes and other stuff has led him to pay a little extra towards his car repayment plan.
“I am learning along the way and I am happy that I am almost done paying off the loan and retail accounts. Once that i s done, I will be saving far more towards a deposit for a house,” Gomba said.
The steps Gomba has taken are what Ntulini advices people to do to reduce their financial stress. Ntulini gives these tips towards achieving that goal:
Get out of debt: Set a budget and stick to it. And then discover the magic of the debt snowball: pay the minimum balance owing on every account and put any extra money you can into the smallest debt until it’s paid off. Then take the amount you were paying for that debt, and apply it to the next biggest debt. And so on.
Create a financial safety net: The pandemic showed us how fast life can change. Start building up an emergency fund to help you deal with life’s curveballs. The earlier you start saving and investing, the more financially healthy you will become.
Put the right insurance in place to protect your loved ones and your most valuable assets should disaster strike. And make sure you have a last will and testament together: it’s these small actions that give you more control and allow you to rest easy.
Protect your income: “Speaking of assets, your biggest one by far is your ability to earn an income. Ask yourself – if you lose your income due to injury or illness, how long will you be able to meet your financial obligations,” said Ntulini.
“Income protection should be the number one priority for every working South African. It provides security when we need it the most. It pays all your other insurance, medical aid, household expenses and school fees when you can’t earn.”
Speak to a financial adviser: “A financial adviser is one of the most valuable allies you can have. They will partner with you on your financial journey, and guide you on achieving your financial goals with a sound savings and investment plan.
“They help you choose the best options to suit your pocket and your needs. They make sure you have the right investments to meet your goals, and the right insurance to protect you and your loved ones. I can’t imagine my financial life without an adviser,” said Ntulini.
*Not his real name
mashabas@sowetan.co.za
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