Taking control of your financial affairs can be difficult - you may have to face up to some unpleasant realities - but that’s better than doing nothing.
As with any daunting task, getting started is often the most difficult part. To help, we spoke to some experts in the business who came up with six suggestions. Not all of them may be applicable, so you can choose the ones that will work for you.
- Review your credit report
You’re entitled to one free credit report a year, which you can get from any of the main credit bureaus such as TransUnion, Experian, Compuscan or XDS. You can also register here https://www.directaxis.co.za/pulse for DirectAxis Pulse, which will provide a credit rating, let you check your profile for mistakes and provide tips to better your score.
Most people assume that their credit score is what it is and there’s nothing they can do about it, but that’s incorrect. If you pay your debts on time, reduce what you owe and settle overdue accounts you can improve your credit score over time.
While reviewing your credit report you may find errors. Correcting these will improve your score.
Checking your credit record is also a good way of spotting whether someone has fraudulently used your identity to open accounts or get credit which can ruin your credit profile.
- Pay your debts on time
Paying your debt before you settle or incur any other expenses is a good budgeting strategy and gives you a realistic outlook on what you can afford. It also helps avoid late payments which, if reported to the credit bureaus, is one of the easiest ways to damage your score.
A way of making sure you don’t miss any instalments, is to set up automatic payments from your current account.
- Set a budget when you go shopping
Hard-earned advice which many mothers pass onto their children is ‘don’t go shopping when you’re hungry’. Inevitably if you do you’ll end up with a whole lot of snacks and treats which you don’t really need.
Similarly if you know more or less what all the items on your shopping list will cost, stick to that limit. You’ll be less tempted to buy non-essentials.
Another tip is to use cash when you shop, as counting out the notes gives you a much better perspective on what you’re spending than swiping a card. Bear in mind though that banks charge you for drawing cash, so this tip works best for big monthly shops rather than regular top-up trips to the supermarket.
- Improve your credit score by 20 points
Very few South Africans have perfect credit scores, which means nearly all of us have room for improvement. Twenty points should be achievable for most people. A benefit of bettering your score is that you can get credit if you need it.
Another is that it could save you money. People with higher credit scores are considered less risk and can be considered for better rates on loans, insurance premiums and rentals.
- Improve your financial literacy
Most South Africans have very little financial knowledge, although there is plenty of information available if you’re prepared to look for it. You can search for more tips at https://www.directaxis.co.za/make-a-plan
There are also plenty of other websites, news outlets and expert blogs and columns available. In fact the volume of information can be daunting, so decide on a few subjects that you’d like to know more about and start there. Compare what you find to make sure you’re getting sound, accurate information. Over time you’ll identify the websites that offer the best information and which best suit your needs.
- Get healthy
International studies indicate that there’s a correlation between physical, emotional and financial health. In the United States it is claimed that people who get regular exercise have better credit scores.
It is certainly true that regular exercise contributes to stress relief. Keeping healthy should also help to reduce medical costs. Work out your annual medical costs, consider the potential future expenses of not living a healthier lifestyle and there could be a sound financial reason for switching off the TV and going for a walk.
Another thing about daunting tasks is that they can be hard to achieve, we chose these six ideas as they really aren’t that difficult to implement, but could make a difference to your financial well-being