With the rising cost of petrol, food and electricity and no increases in household income, there are more chances for people getting into debt.
The household debt-to-income ratio in South Africa is expected to reach 75% by the end of 2022, according to analysts.
This means that for every R100 a South African has, R75 goes towards paying off debt.
Paying off debt can put consumers under pressure, increasing their need of proper debt-management strategies to enable good saving practices.
The benefit of proper debt management is future financial success and security – something that everyone wants to achieve.
Alex Ollewagen, client solutions actuary at Metropolitan, offers three ways you can manage your debt and gain control of your finances.
1. Budget
The most important component of money management is drawing up a budget with all your income and expenses. You can have a weekly or monthly diary. IOL also rand this article recently to help you set up a budget.
There are online tools available that can help to kickstart your budget like budget calculators or budget apps.
2. Know your debt
Along with a budget, it is essential to have a view of your debt. You can do this by listing all outstanding payments on credit cards, personal loans, and other bills you owe.
Ollewagen says you will “realise the importance of paying off credit cards or personal loans sooner by paying more than the minimum payment each month, and saving on interest charges in the long run".
3. Get advice
The final element of financial wellness and enhanced debt management is having the right financial adviser to be your partner on your journey to financial freedom.
Speak to an accredited financial adviser to help you with money matters and managing your debt.
“Managing your debt better today is crucial to create money for saving, which is an important step on your journey to financial wellness,” Ollewagen says.
IOL Business