Following a tough 2023 financial year where South African consumers struggled with the rising cost of living, high interest rates and a tough economic climate, it is essential that they prepare themselves for any further economic turbulence.
Sbusios Kumalo, chief marketing officer at African Bank said that it is vital that consumers’ financial plans prepare them for harsh economic times so they can avoid being stuck in the middle of a storm.
Kumalo offers to help people be prepared for any financial storm:
– Review your bank statement to determine your expenses and be honest in identifying what expenses can be downscaled or cut off.
– Divide essential expenditure (rent, fuel, insurances) from discretionary expenditure (entertainment, subscriptions, travel). Money cut from discretionary spending can be put into savings.
– Focus on repaying high-interest debt to free up savings in your budget that can be put into an emergency fund.
– Put at least six months’ worth of expenses into a liquid and accessible account to cover emergencies, retrenchments or pay cuts. You can do this by making small contributions to a high-interest savings account or into a high-yielding investment account.
– Draw up a budget plan that has separate sections for your income, expenses and your savings. You can make use of the budgeting tools that are available online to help you live within your means and not overspend.
– Don’t panic and jeopardise your long-term financial security based on short-term economic events. Stay consistent with your investments and savings, especially for retirement.
– Leverage your earning opportunities by turning a hobby you’re good at, into a lucrative side hustle. The extra cash could be an important way to boost your income.
IOL Business