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Struggling To Cope With Cost Of Living? 3 Tips On How To Handle Money

Struggling To Cope With Cost Of

Given the difficult environment, focus on what you can control so that you are better positioned to deal with any setbacks as the economy starts to recover. Here’s how

 With the turmoil of 2020 behind us and a return to something approaching normal in the first quarter of 2021, now is a good time to take stock of your finances. Here are three ways to do that:

Assess where you stand financially

Do an honest assessment of your financial situation using an online self-help tool. It may sound daunting, but other than taking a bit of time it’s an easy thing to do and will give you a perspective on where you are, help you set some goals and keep track of progress.

There are plenty of financial online tools available to help you, such as

Alternatively, divide a sheet of paper into two columns and list all your income in the left column and all your expenses on the right.

Be as honest and thorough as you can. Your bank statements for the past few months, bills and receipts can all help build an accurate picture of how much you’re spending and on what.

It should give you an idea of where you can reduce some expenses and which debts to pay off – preferably start with short-term debts with the highest interest rates.

Ideally, you should do this exercise every quarter. Having done it once, it’ll take you less time when you do it again.

Set reachable but stretch financial goals

These will depend on financial circumstances and will be different for everyone. At the same time, they should be informed by your own assessment in step 1.

For some, it may be planning to pay off short-term or unsecured debt, for others, it could be starting an emergency fund to cover unexpected future expenses, while those with some disposable income may consider investments as a good way to grow their money.

The important thing is to be realistic during the timeframe in which you are trying to reach your objectives. Meeting achievable targets will encourage you to aim higher.

The best approach is to think about a series of steps ranging from smallest to largest, and then build them over a longer time horizon.

Once you’ve achieved a few goals, you should get to a position where you’re able to save some money each month. By investing your savings in the right places you can eventually reach your larger, longer-term goals.

Don’t delay

If your assessment in step 1 finds that your monthly expenses exceed your income and you can’t find a way to rectify this, you may need expert help in the form of a debt counsellor. Find a reputable, registered debt counselling firm with qualified debt counsellors who will give you impartial advice and help you make the right decisions.

Debt counselling is a process regulated by the National Credit Act, which allows consumers to pay off their debt over an extended period at lower interest rates. Reductions of up to 90% on interest rates for unsecured debt can be negotiated. Debt counselling helps you pay at a rate you can afford and retain your assets such as your house and car.

Avoiding or ignoring the problem is a common reaction when people are struggling with debt and have fallen behind on paying for a home or a vehicle, but it’s not a solution. There are options, but it’s important to act before you face the possibility of having your house or car repossessed.

Words: Benay Sager, head of DebtBusters.

Source: Supplied.

Pontsho Manzi

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