Being responsible with credit means your credit record stays in good shape. We show you why and how to use credit responsibly.

 Why is a good credit record important?

1. A good credit record means you could qualify for higher loan amounts and lower interest rates. You’re also more likely to be considered for future credit if you use yours responsibly
2. You’ll have less stress and sleep better. Lack of sleep can lead to higher levels of anxiety, depression, higher risk of stroke and heart disease as well as impaired memory
3. It’s hard to get out of debt if you’ve taken on too much. If you have, it makes it difficult to maintain a clear credit record
4. A court may issue a garnishee order against your salary if you can’t repay the loan
5. Creditors can repossess your good if you miss any payments

Things to consider and questions to ask

• Do you need the money and what you’ll buy with it, or do you just want it?
• Is it for things that add and grow in value, such as a house or education? Don’t use credit for consumption spending or luxuries (e.g. food, clothing, petrol, holidays)
• Understand the offer and ensure that there are no hidden costs – credit life insurance is the most common hidden cost. Capitec Bank offers retrenchment and death cover for credit 6 months and longer
• Use registered credit providers only. Mashonisas and loan sharks are expensive, illegal and dangerous
• Know your rights in terms of the National Credit Act (NCA)

Keep your credit profile clean

All credit-active South Africans have a credit profile. Keep yours clean with these tips:

• Have a money plan: Work out how much you can repay per month. This should ideally not be more than 10% of your monthly income. Taking credit is a medium- to long-term commitment. Make sure you can afford to pay it off over months or even years
• Shop around: Go to different credit providers and stores and ask about their repayment plans, interest rates and costs
• Save for a deposit: Your monthly repayments will be smaller when you pay a big deposit. Planning and saving for a purchase is better than buying on impulse
• Pay off credit quickly: The longer you take to repay credit, the more interest you pay. If you’re struggling with your repayments ask the credit provider whether you can pay off smaller amounts over a longer period of time. You’ll pay more interest, but you‘ll avoid ruining your credit record
• Consolidate your debt: If you can borrow money at a low interest rate from a bank or registered credit provider, you can pay off all your high-interest accounts. You’ll then have only one monthly amount to pay back
• Stick to your repayment plan: Pay the amount you owe every month to avoid a bad credit record. You will have more creditworthiness when you manage your accounts properly

There are many benefits to managing your credit wisely. If you must borrow money, go to a registered credit provider you can trust. Find out which one has the lowest credit interest rates and the lowest banking fees.

It takes discipline to stick to your budget and repayment plan. If you do, you will pay off your debt over time and protect your credit record. Remember, a good credit record could even help give you access to credit when you need money in an emergency situation.

Set priorities

When you sit down to do your budget, do a reality check. What can you afford? We’d all like a bigger apartment or a fancier set of wheels but come on, we’re students. We need food and beer too! So set your sights on what’s affordable and remember, there’s time to buy the sexy stuff when we’re successfully employed.

 Shop for specials

Sounds like advice from grandma but it works. A little planning around your local supermarkets and their “specials cycles” can save you quite a bit of cash. Stock up on non-perishables on special (they last) and try and create your meal plans around the items on sale at reduced prices.

Part-time work ideas

If you find that your current income isn’t quite covering everything you need it to, there are plenty of little things you can do to earn money. Perhaps you could babysit, tutor, have a garage sale, offer your social media skills to a local small business, give guitar or art lessons.

Walk don’t ride

We are generally an unfit nation. And often quite lazy. So instead of wasting money on petrol or fares, take a hike! To the shops, to a friend’s, or to class.You’ll feel better for it.

Home-based entertainment

Movie night and a meal at home (with you as chef and host) is a lot less expensive than going out on the town. And your friends will be more than willing to contribute for a good night in.

Take your own lunch

Midday meals from your local fast-food outlet are tempting. And expensive. Try get into the habit, as often as possible, of keeping leftovers from the night before to pack as a lunch.

Shop pre-owned

It’s become quite acceptable, even trendy, to buy, sell and wear second-hand clothing. The same goes for your textbooks, furniture and electronics. Gumtree and local social media groups are full of great deals.

Use your student card

Use it whenever and wherever you can. Many retail stores offer student discounts on food and clothes. Also take advantage of student discounts at gym, movies, sports events and nights out.

Open a savings account

Choose a bank that gives you a choice of savings plans to suit your personal goals. Fixed, flexible or tax-free savings plans are available. Compare interest rates and monthly service fees. Having a savings account creates a framework of discipline to help you stick to your plans and reach your goals.

But there are ways you can earn money without serving food and drinks on the weekend. Come on, let’s find the entrepreneur in you!

House-sitting

With the growing popularity of social media neighbourhood groups, there are many ways you can put your services out there. Make sure you have good personal references to offer a family who needs a baby or pet-sitter. If you’re lucky, you can house-sit for long periods and make good money in comfort! Going rates for sleep-in house-sitting services are R230 – R300 p/d.

Tutoring

You’ll notice (if you’re looking) that your local social media groups or community newspapers will always have ads for tutors – especially Maths and languages. Or musical instrument lessons. Turn your talents and passions into cash. If you’re a handy sporty type, try your local teams who might be looking for refs or coaches.

Surveys & Focus groups

Check out the market research businesses in your city and offer your services. You’ll be surprised how many focus groups and one-on-one interviews are conducted for a whole range of products and services. You are a consumer so your views and opinions are of value to marketers – and you get paid to express them!

Run a small business’ social media

You’ll be surprised how many businesses just haven’t got around to employing the power of social media in their communications mix. You’re no doubt already an expert on Instagram and Facebook, so doing the same thing for a small business is right up your street. Start by calling around. Have a plan on how you’ll manage their posts and community engagement. Two or three clients paying you a modest fee will get you up and running.

Garage/yard sale

Turn your old stuff into cash – clothes, furniture, books and stuff you’re just tired of. One person’s junk is someone else’s treasure. Get your friends involved. Hype it up in the hood and in your online community pages. Have some fun and make some cash. If it all sounds like too much work, visit the many used clothing or 2^nd hand furniture shops around you.

Sell stuff online

Let’s face it; the web offers a much larger audience than your neighbourhood garage sale. But the same principle applies…get rid of stuff you don’t want or need; you can be sure someone else is looking for it!

Make your own products

Maybe you’re handy with wood, or metal, or electronics, or simple crafts. Using the internet, you’ll always find someone looking for something unique. Having a hobby you love is good for stress levels – especially if it can make you cash!

Sell at a farmers market
They’re popping up everywhere. And it’s not just farmers who are cashing in. If you have a talent for making homemade candles, pies, essential oils – go and chat to the organisers of a craft/farmers market in your neighbourhood. Do things you love in your spare time and make extra cash, and new friends.

Open a savings account

It makes sense to put away any extra cash you make into an account that earns you a good interest rate. Not only do you watch your money grow, but it is a great motivator to be more disciplined in your spending.

These steps will help you get going.

Note your expenses

Obviously, the starting point is looking at your expenses. Try break it all down into categories and don’t leave anything out. Write everything down. Start with the big numbers – rent, transport, insurances, accounts, groceries. Keep track of the small numbers too – coffees, snacks, tips. Now that you have your costs grouped, you can begin the next step.

Budget

Here again, some banks have useful tools to help you structure your personal budget plan. Once you have an idea of what you spend in a month, you can begin to organise your recorded expenses into a workable budget. This should measure your expenses against your income – and give you a clear picture of where you’re over-spending and where you can trim. Besides all your monthly commitments and living needs, be sure to allow for those “surprise” expenses, like new tyres or a medical emergency.

Be tough on yourself

Common wisdom is that you should aim to allocate 10% of your income to savings. Not always possible, right? You may have to trim a little here and there. Look at those expenses that you can realistically cut. Usually, the money you spend on yourself or on entertaining others. To make it a little easier on yourself, try thinking of savings as an essential expense, like food or rent. That might help put your “night out” spending into perspective.

Goal setting

One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—break them down into short-term and long-term lists. Then figure out how much money you’ll need and how long it might take you to save it.

Short-term (1–3 years)

– Unexpected expenses

– Holidays

– Deposit on a vehicle

Long-term (4+ years)

– Home renovations

– Kids education

– Your Retirement

Again, check your bank’s website for savings tools or free Apps.

Open a savings account

Choose a bank that gives you a choice of savings plans to suit your personal goals. Fixed, flexible or tax-free savings plans are available. Compare interest rates and monthly service fees. Having a savings account creates a framework of discipline to help you stick to your plans and reach your goals.

Financial literacy is not something everyone is taught before they leave school. Or ever. Basically, it’s one of those all-too important pillars of successful “adulting”.

Making wise financial decisions has a huge impact on your future, your pocket and your mental health! With a little financial wisdom, you can aim to successfully save money, budget and invest smarter, and live better.

Here are a few key concepts to help you become more financially savvy:

1. Budgeting

Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. In this modern day, it’s easier than ever to create a budget with the availability of free websites and apps that help with budgeting, tracking your spending, saving, transaction history, inter-account transfers and many other benefits for first-time or mature banking clients.

It doesn’t matter if math isn’t your strong suit – thanks to these user-friendly tools, everyone can get help with keeping their finances on track. And, when used properly, they’ll keep you in the know about where your money is actually going.

Without following a budget, it’s difficult to hold yourself accountable on where your money is coming from and where it’s going. So mastering the basics of budgeting is where any financial novice should begin.

2. Interest

It’s important to understand interest and the impact it can have on your financial life.

. The best way to reduce the interest you pay is to always make your payments on time. Overdrawn accounts carry interest penalties. The sooner you pay off your loan, the less interest you pay.

Shop around and compare the interest rates that different banks charge before making a decision. See if they’ll fix the interest rate you’re charged. This means your repayments will stay the same and won’t increase if the interest rate increases.

Understanding the ins and outs of interest can impact your finances more than you realise, so it’s an important concept to gain a better understand of early on in life.

3. Staying Savvy by Saving

Obviously, saving is an important aspect of maintaining a healthy financial situation. It’s easy to ignore things like retirement since it seems so far off in the future. Learning to save early on can help you gain the knowledge, practice and set of skills you’ll need throughout your adult life. Beginners can start working on this concept in the simplest sense, like saving money for something you want, like a laptop or new phone.

Working toward a goal is key here; know what you are saving for and track all your expenses. Also, choose a bank with the right products and services to make saving easy.

4. The Credit-Debt Roller-coaster

Maybe roller-coaster isn’t the right term – perhaps, downward spiral is more accurate. Meaning: it’s much easier to lose credit than gain it. Credit can be an extremely useful tool – if it’s managed correctly. Making rash decisions when you’re young can end up costing you throughout adulthood; so it’s important to grasp the concepts behind responsible credit practices as early on as possible.

5. Identity Theft Issues & Safety

In this modern day and age, identity theft is more prevalent than ever. Since everything is digital and just about everyone has shopped online at one point or another, your financial information is more vulnerable to fraud. Understanding this concept, along with preventative measures, like password protection and limiting the amount of information shared online can be the key to maintaining safe accounts or, inversely, can lead to financial ruin. While it’s not a fool proof science (people can be safe and things do still happen) it’s important to safeguard your finances as best as possible to avoid the threats that exist.

Credit: This article edited from original fastweb.com

• Take charge of your finances. Procrastinating is detrimental to your long-term financial health. Don’t wait for a crisis or major life event to get your act together.
• Don’t buy consumer items (cars, clothing, vacations, and so on) that lose value over time on credit. Use debt only to make investments in things that gain value, such as real estate, a business, or an education.
• Use credit cards only for convenience, not for carrying debt. If you have a tendency to run up credit-card debt, then get rid of your cards and use only cash, checks, and debit cards.
• Live within your means and don’t try to keep up with your co-workers, neighbors, and peers. Many who engage in conspicuous consumption are borrowing against their future; some end up bankrupt.
• Save and invest at least 5 to 10 percent of your income. Preferably, invest through a retirement savings account to reduce your taxes and ensure your future financial independence.
• Understand and use your employee benefits. If you’re self-employed, find the best investment and insurance options available to you and use them.
• Research before you buy. Never purchase a financial product or service on the basis of an advertisement or salesperson’s solicitation.
• Avoid financial products that carry high commissions and expenses.Companies that sell their products through aggressive sales techniques generally have the worst financial products and the highest commissions.
• Don’t purchase any financial product that you don’t understand. Ask questions and compare what you’re being offered to other offers in the market.
• Invest the majority of your long-term money in ownership vehicles that have appreciation potential, such as stocks, real estate, and your own business. When you invest in bonds or bank accounts, you’re simply lending your money to others, and the return you earn probably won’t keep you ahead of inflation and taxes.
• Avoid making emotionally based financial decisions. For example, investors who panic and sell their stock holdings after a major market correction miss a buying opportunity. Be especially careful in making important financial decisions after a major life change, such as a divorce, job loss, or death in your family.
• Make investing decisions based upon your needs and the long-term fundamentals of what you’re buying. Ignore the predictive advice offered by financial prognosticators — nobody has a working crystal ball. Don’t make knee-jerk decisions based on news headlines.
• Own your home. In the long run, owning is more cost-effective than renting, unless you have a terrific rent-control deal. But don’t buy until you can stay put for a number of years.
• Purchase broad insurance coverage to protect against financial catastrophes. Eliminate insurance for small potential losses.
• If you’re married, make time to discuss joint goals, issues, and concerns. Be accepting of your partner’s money personality; learn to compromise and manage as a team.
• Prepare for life changes. The better you are at living within your means and anticipating life changes, the better off you will be financially and emotionally.
• Read publications that have high quality standards and that aren’t afraid to take a stand and recommend what’s in your best interests. Avoid those that base their content on the hottest financial headlines or the whims of advertisers.
• Prioritize your financial goals and start working toward them. Be patient. Focus on your accomplishments and learn from your mistakes.
• Hire yourself first. You are the best financial person that you can hire. If you need help making a major decision, hire conflict-free advisors who charge a fee for their time. Work in partnership with advisors — don’t abdicate control.
• Invest in yourself and others. Invest in your education, your health, and your relationships with family and friends. Having a lot of money isn’t worth much if you don’t have your health and people with whom to share your life. Give your time and money to causes that better our society and world.

By Eric Tyson

This path brings its own responsibilities. You’ll have to make mature, adult decisions to go along with it. These decisions will affect you for the rest of your life, so think carefully and plan well. Your future will depend on it!

For a richer, brighter, happier future – start saving!

Where do I start?

Now! Start with your very first pay cheque or your very next pay cheque. The temptation to rush out and spend every single cent of your salary is very real, but, if you continue to do this every month you will end up broke, depressed and extremely stressed. The first thing to remember is:

Always spend less than you earn! This means living within your means’.

For financial peace of mind, experts say that at least 20% of your salary should go into some form of savings or a combination of different saving plans.

Why should I save?

Here are 4 reasons why you should save:

1. General Savings

Are you thinking of leaving home and getting your own place? You will need to pay a deposit (sometimes up to 2 months rent). You will need to save up for this You might need to buy some furniture, linen, crockery, cutlery or even a television to put in the apartment or house. You will need to save up for this.

2. Fun Savings

Do you dream of spoiling yourself with a fantastic holiday? Buying yourself a car? A motorbike? Or a designer coat? If you do, you will need to save up for this.

3. Emergency Savings

Bad, unexpected things happen in life and if you haven’t planned and saved up for it, it could stress you out and get you into financial trouble. There are many bad situations, but here are a few examples:

Unexpected emergencies:

1. You suddenly lose your job – no job is guaranteed!
2. You’re in a car accident!
3. The geyser in the house starts leaking!
4. You have a burglary and they steal all your clothes, or more!

4. Life Savings

Life happens! Some things in life are guaranteed to cost you: your health, your family and your retirement. All these things need to be planned for right from the start, . . . right from your very first pay cheque.

• Your Health

You need to get medical insurance. You can do this by joining your company’s medical aid scheme or by joining a private scheme. If you have a medical emergency, go to hospital, or need medical treatment of any kind, your insurance should cover you and you won’t have to scramble to find the money.

NOTE: If you fall pregnant, your Medical Aid will also help you out. You must belong to a Medical Scheme for at least 3 months before falling pregnant though.

If you have children or other dependants, it would be wise to get some form of Life Insurance. This means if you die unexpectedly, from a long illness or accident, your dependents will be paid out a large sum of money to help them when you are gone.

• Your Family

If you have children and want them to have a good education – you will have to save up for this.

• A Home Of Your Own

If you want to eventually buy your own family home, you will have to save up for the deposit.

• Your Retirement

FACT: Inflation is a killer and you can’t run away from it! If you don’t plan for your retirement now, when you are young, you will end up old and poor. In the year 2050, you may pay up to R200 or more for a loaf of bread. At this rate, you may never be able to retire! There are many monthly payment options that you can pay into. Even a small amount per month – will help you when you are older. The more you save now, the more comfortable you will be later.

How do I start saving?

1. Credit

Get rid of any credit card debt you have, ASAP! Credit Card debt can and will cripple you! 

FACT: The main reason for the current economic collapse of most countries, is due to their debt!

There really are only 4 things on this planet that should require credit or a loan:

1. Buying a house
2. Buying a car
3. Starting a business
4. Paying for studies.

The rest of your ‘stuff’ should not be bought on credit cards.

If you save up for the item, for example: new shoes, laptop, mobile phone or new curtains for the bedroom – you will suddenly realise that you are free from all the stress that rushes through you when you eventually have to find the money AND the added interest to pay off the debt on your credit card.

Added interest on credit card debt is insane! Sometimes you end up paying almost double for the item on credit than you would if you had saved up for it and paid for it in cash. Paying more for an item than it is worth does not make sense.

Try to avoid peer pressure to buy and collect fashionable items to make you feel like you are fitting in. Being your own person, with no debt, is far more advantageous.

Avoid credit at all costs!  No Debt = Financial Freedom!

2. Savings

Work out what 20% of your salary is. This is your ‘savings’ plan. Discuss various savings options with your bank, a financial advisor or someone with banking experience. You can open a separate bank account, take out a retirement annuity, join your company’s retirement & medical aid schemes, buy unit trusts etc or create a combination of some of these options.

3. Budget

Plan a budget with the remainder of your salary. Work out what you spend your money on and how much you spend on each item. Keep a monthly record of your budget so you can see what you need, what you want and what you are wasting your money on. This will help you spend and save your hard-earned money wisely.

Work hard – Save now – Spend wisely – Live free – Have fun

‘The secret of financial success is to spend what you have left after saving … instead of saving what you have left after spending.’ – Jewel Diamond Ta

Pic credit: Pixabay