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Your most important new year's resolution should be financial stability.
Unfortunately, during this period, many South Africans are likely to increase credit limits, pushing debt levels further into the red.
During the festive period, savings and paying off debt is often neglected. It is easy to be swept up in the hype of holiday spending, a reckless approach to expenditure will have a disastrous effect on your savings.
Can you believe that the total value of new credit granted during the fourth quarter of 2012 increased by 9.21% (quarter-on-quarter).
This highlights how consumers ramp up borrowing ahead of the festive season. It also means that consumers are starting the year on the back foot. The same thing happened in previous years.
Also, people who were more than three months in arrears on their repayments, has been rising steadily. At the end of September 2013, 48% of consumers had impaired records.
Households in the lower income brackets have a particularly dim view of their own financial position and if one considers that many of these households participated in the massive boom in unsecured lending, this reading makes sense. These households are now paying off these loans, and are in most instances, are unable to borrow further.
While it may be tempting to utilise credit to maximise the holiday experience, you need to seriously reconsider.
It is a known fact that many South African companies have shifted from defined benefit to defined contribution pension schemes, meaning that the onus rests on the individual to ensure that they have saved enough and that they are making sufficient retirement provision. The current Government pension funding available to people over the age of 60 is only R1 270 per month, which is not remotely enough to sustain a comfortable retirement for most retirees.
Each individual has become accustomed to a specific lifestyle throughout their working life and without sufficient savings and wise investment decisions, the likelihood of having to downgrade your life significantly after retirement is extremely high.
South Africa’s current ratio of household debt to disposable income remains at an elevated level and reflects a poor savings environment for individuals.
Unfortunately many individuals are simply unwilling to save more simply due to the fact that the desire for instant gratification is too strong.
A lot of people receive bonuses or 13th cheques this time of year, but spend it instead of investing at least a portion. Often they argue that there is no point in making small investments. However, the power of compounding means even a small investment now can have a big impact later.
Another key contributor to poor savings is ignorance around how much needs to be saved to secure that pictured retirement, or having unrealistic expectations of how much an investment will grow before retirement.
With 2013 coming to an end, individuals are beginning to plan their New Year resolutions, and something that should be a priority is ensuring financial security for your future.
A New Year brings various challenges, often involving unexpected costs, so putting a financial plan in place will increase financial confidence by ensuring that individuals are aware of how much is needed to meet their future financial goals, as well as whether they are actually on track to reaching these goals.
Follow Women24 on Twitter and like us on Facebook.
Unfortunately, during this period, many South Africans are likely to increase credit limits, pushing debt levels further into the red.
During the festive period, savings and paying off debt is often neglected. It is easy to be swept up in the hype of holiday spending, a reckless approach to expenditure will have a disastrous effect on your savings.
Can you believe that the total value of new credit granted during the fourth quarter of 2012 increased by 9.21% (quarter-on-quarter).
This highlights how consumers ramp up borrowing ahead of the festive season. It also means that consumers are starting the year on the back foot. The same thing happened in previous years.
Also, people who were more than three months in arrears on their repayments, has been rising steadily. At the end of September 2013, 48% of consumers had impaired records.
Households in the lower income brackets have a particularly dim view of their own financial position and if one considers that many of these households participated in the massive boom in unsecured lending, this reading makes sense. These households are now paying off these loans, and are in most instances, are unable to borrow further.
While it may be tempting to utilise credit to maximise the holiday experience, you need to seriously reconsider.
It is a known fact that many South African companies have shifted from defined benefit to defined contribution pension schemes, meaning that the onus rests on the individual to ensure that they have saved enough and that they are making sufficient retirement provision. The current Government pension funding available to people over the age of 60 is only R1 270 per month, which is not remotely enough to sustain a comfortable retirement for most retirees.
Each individual has become accustomed to a specific lifestyle throughout their working life and without sufficient savings and wise investment decisions, the likelihood of having to downgrade your life significantly after retirement is extremely high.
South Africa’s current ratio of household debt to disposable income remains at an elevated level and reflects a poor savings environment for individuals.
Unfortunately many individuals are simply unwilling to save more simply due to the fact that the desire for instant gratification is too strong.
A lot of people receive bonuses or 13th cheques this time of year, but spend it instead of investing at least a portion. Often they argue that there is no point in making small investments. However, the power of compounding means even a small investment now can have a big impact later.
Another key contributor to poor savings is ignorance around how much needs to be saved to secure that pictured retirement, or having unrealistic expectations of how much an investment will grow before retirement.
With 2013 coming to an end, individuals are beginning to plan their New Year resolutions, and something that should be a priority is ensuring financial security for your future.
A New Year brings various challenges, often involving unexpected costs, so putting a financial plan in place will increase financial confidence by ensuring that individuals are aware of how much is needed to meet their future financial goals, as well as whether they are actually on track to reaching these goals.
Follow Women24 on Twitter and like us on Facebook.
