In an age where people have the freedom to make decisions that satisfy their needs and wants, coupled with current economic climate, South African consumers are likely to face the burden of debt.
Charnel Collins CEO of National Debt Advisors said: “During these tough economic times, debt continues to be a heavy burden to bear for many households who are struggling to make ends meet.”
According to Collins, the constant battle to reduce their debt often leaves people with little to no room to get on to the path of financial freedom.
Collins said financial freedom is the ability to make life decisions without the stress of worrying about the financial consequences.
Here are six tips to aid your journey to financial freedom.
Set financial goals:
Identify your short-term and your long-term financial goals. Knowing your financial goals will keep you on track and motivated in executing your goals.
Stay on a budget
Set up a spending plan that takes into accounts for your earnings, expenditure, and savings. Ensure that you stick to the budget and avoid unnecessary expenses.
Create an emergency fund
Put aside a fixed amount of your income to create an emergency fund that can be used to cover unexpected costs.
According to Katlego Gaborone, a financial planner at Momentum, people need to have at least three months’ salary saved up in an emergency fund.
Pay off debt
“Avoid incurring debt, and if you do, pay it off as soon as you can to save money on interest,” Collins said.
One of the ways that you can get rid of your debt is to contribute any extra income that you receive such as a bonus or inheritance towards paying off your debt.
Farzana Botha, Segment Solutions Manager at Sanlam Savings said that people may be excited to put any extra money towards a holiday or a car but they should use the money to service their debt.
Increase your income
Look at other ways to earn more money by exploring secondary income options like a side hustle or find a higher-paying job.
Keep track of your progress
Collins said that people should review their finances on a regular basis and track their financial progress toward their financial goals. You can stay on track by adjusting your plan as needed.
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