Experts agree that the best way to financial freedom is to better manage your debts while living within your means. Here are five ways to better manage your money
Track your spending
Understand where your money is going and how much you are spending. You can either track your spending habits on your own or use FNB’s nav» Money on the FNB App. nav» Money is a digital solution offering smart tools to track your money management, ensure that you don’t spend more than you earn, view your credit status and save smart.
Understand your credit score
Managing your credit score is very important because it affects what credit you could qualify for, how much you could qualify for, and what interest rate you would pay. An impaired credit score can result in difficulty obtaining credit, or a cellphone contract and may even be referenced by a potential employer.
If you have a good credit rating, you will more likely be approved for credit and the better your credit rating, the more likely you are to qualify for a lower personalised interest rate depending on the institution that you are applying with. You can maintain a healthy credit score by ensuring that you only borrow what you know you can repay and by never skipping a payment.
Educate your family
Being financially savvy is a family affair and not the sole responsibility of the income earners in the family. Teaching your family, in particular, your children about responsible spending and financial behaviour will set them up for good habits later in life. Talk about how to budget and save. Also, encourage loved ones to have patience and discipline in growing their money long-term.
Earn an income and protect your assets
Your ability to earn an income is your most valuable asset, whether you’re a young graduate, employed or a small business owner. Not only is it the cornerstone of your financial stability now and future, but it also assists you to accumulate assets over your working life. It is wise to have an income protection plan to ensure you continue to have income stability should an unforeseen event occur.
Plan for a rainy day
The Covid-19 pandemic has taught us about the importance of having emergency savings for a rainy day. The conversation of saving can be intimidating and often we can find ourselves strapped for cash without the means to save large amounts of money. Track your spending and apportion a percentage of your discretionary income to savings before you spend it on other things. Look into consolidating your debt if you have any as that can also free up some cash flow and potentially reduce your cost of servicing your debt.
Words: Emma Mer, CEO of FNB Retail Loans.