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Johannesburg- Just like Eskom needs to implement load-shedding when its power stations are taking strain, consumers might also need to make some cuts in their budgets for every dent in their pockets, according to BrightRock executive director Schalk Malan.
He provides tips on how to "load shed" your finances:
Prioritise debt with high interest rates
Do the maths. The interest paid on an average credit card debt of R10 000 adds up to more than twice the cost of R10 000 on your mortgage over five years.
It might be a good idea to consolidate your debt towards the debt source with the lowest interest rate. An example of this would be an access bond.
Once that is done, lower the limit on your credit card or, even better, snip it.
Keep tabs on your living costs
If you do not have prepaid electricity at your house, install it.
Monitor your water meter. A leaking pipe costs more than you think. Also, look into more affordable subscription bouquets for monthly expenses, like pay-television and broadband.
Scrutinise your bank and account statements
Do you know what all your debit orders are for?
How about those added services that overlap with what you already have with your short- and long-term insurers?
All the little things add up. Chances are there are quite a few deductions for cover or services you don’t need – or never use.
Scrutinise your automated expenses and cut the fat out of your debit orders.
Get rid of the waste in your insurance cover.
How much have your insurance premiums increased over the past few years?
Bear in mind cheap premiums aren’t necessarily sustainable. In the case of life insurance premiums, for example, many policies lump all your short-, medium- and long-term needs together.
These benefits are priced for the maximum term and grow by an arbitrary rate - usually inflation – irrespective of the fact that your financial needs change.
Some – like the need to cover your debts – may fall away in time.
Some policies tend to increase steeply later, while other policies promise pay-outs for claim-free periods that are built into their premiums.
Remember, there’s no such thing as a free lunch. There are new life insurance products available that are able to tailor your cover to each specific financial need, and change according to the need.
This means your cover is priced appropriately, which could generate average savings of around 30% by simply stripping out the waste.
Review your cover regularly and ensure your cover is – and stays – relevant, so you’re only ever paying for the cover you need.
Never skimp on your insurance either
If you have debts to honour and a spouse and/or family to provide for, you need to be covered for death and disability.
Ask your financial adviser about the flexibility of this cover. Does it change as your needs and responsibilities change?
Do the premiums stay efficient by sticking to relevant cover? Will you be allowed to increase your cover or transfer cover from one need - for instance cover for your bond, which has been paid off - to another - like disability cover?
- Fin24
* Struggling with debt? Help us help you by taking our second annual Debt survey and you could win R3 000, or add your voice by sharing your debt experiences, debt-busting tips and insights. Have a question? Ask our experts.
He provides tips on how to "load shed" your finances:
Prioritise debt with high interest rates
Do the maths. The interest paid on an average credit card debt of R10 000 adds up to more than twice the cost of R10 000 on your mortgage over five years.
It might be a good idea to consolidate your debt towards the debt source with the lowest interest rate. An example of this would be an access bond.
Once that is done, lower the limit on your credit card or, even better, snip it.
Keep tabs on your living costs
If you do not have prepaid electricity at your house, install it.
Monitor your water meter. A leaking pipe costs more than you think. Also, look into more affordable subscription bouquets for monthly expenses, like pay-television and broadband.
Scrutinise your bank and account statements
Do you know what all your debit orders are for?
How about those added services that overlap with what you already have with your short- and long-term insurers?
All the little things add up. Chances are there are quite a few deductions for cover or services you don’t need – or never use.
Scrutinise your automated expenses and cut the fat out of your debit orders.
Get rid of the waste in your insurance cover.
How much have your insurance premiums increased over the past few years?
Bear in mind cheap premiums aren’t necessarily sustainable. In the case of life insurance premiums, for example, many policies lump all your short-, medium- and long-term needs together.
These benefits are priced for the maximum term and grow by an arbitrary rate - usually inflation – irrespective of the fact that your financial needs change.
Some – like the need to cover your debts – may fall away in time.
Some policies tend to increase steeply later, while other policies promise pay-outs for claim-free periods that are built into their premiums.
Remember, there’s no such thing as a free lunch. There are new life insurance products available that are able to tailor your cover to each specific financial need, and change according to the need.
This means your cover is priced appropriately, which could generate average savings of around 30% by simply stripping out the waste.
Review your cover regularly and ensure your cover is – and stays – relevant, so you’re only ever paying for the cover you need.
Never skimp on your insurance either
If you have debts to honour and a spouse and/or family to provide for, you need to be covered for death and disability.
Ask your financial adviser about the flexibility of this cover. Does it change as your needs and responsibilities change?
Do the premiums stay efficient by sticking to relevant cover? Will you be allowed to increase your cover or transfer cover from one need - for instance cover for your bond, which has been paid off - to another - like disability cover?
- Fin24
* Struggling with debt? Help us help you by taking our second annual Debt survey and you could win R3 000, or add your voice by sharing your debt experiences, debt-busting tips and insights. Have a question? Ask our experts.
