Learn how to take control of your finances with actionable tips for achieving financial well-being in the new year. File photo.
By: Ans Gerber
As we start 2025 and set new goals for our health, employment, or education prospects, it's also a good idea to look into our financial fitness. Taking steps towards financial well-being can help you achieve a more secure and prosperous year.
In 2024, the South African economy presented a mixed bag. While inflation cooled slightly to 3.8% in September, according to Experian’s Q3 Consumer Default Index (CDIx), the cost of living remained a significant concern, impacting everyday expenses like food, fuel, and electricity in particular. Interest rates, though down slightly from their peak, continued to add pressure to household budgets.
Feeling the pinch? You're not alone. The good news is that even small steps towards financial fitness can make a big difference. Remember, steady progress is the key.
Many South Africans are actively seeking ways to improve their financial well-being, turning to side hustles and embracing the gig economy as a testament to their resilience in the face of economic challenges. This proactive, entrepreneurial spirit is a powerful asset.
We know that financial situations vary widely among individuals, but if you're among those striving for financial betterment, you’re in the right place. Let’s unpack five practical strategies that empower you to take control of your finances and build a more secure future.
Check your financial roadmap: a budget isn't about restriction; it's about understanding where your money goes, and highlighting where you can adjust. Up, Experian’s free web-based app is an invaluable tool that helps you manage your money, improve your credit score, and upskill your financial savvy. Cutting back on regular takeaway meals, finding more affordable entertainment options, or exploring cheaper mobile data plans can also free up surprisingly significant funds over time. Think of it as pro-actively telling your money where to go, rather than wondering afterwards where your money went.
Tackle debt strategically: high interest rates make managing debt crucial. Explore options to consolidate high-interest debt, such as credit card balances, into a lower-interest personal loan. If you're struggling, contact your creditors to discuss possible payment arrangements. Prepare a list of your debts and propose a realistic payment plan. Don't hesitate to reach out to your credit providers – they may be more willing to work with you than you think.
Build a safety net: even small, regular contributions to a savings account to build an emergency fund can provide a crucial buffer against unexpected expenses like home or car repairs, medical costs, or a funeral. Aim to build an account that covers three to six months of essential living expenses. This safety net not only provides financial security but also peace of mind, reducing stress related to unforeseen financial challenges brought on by loss of work or illness. Contributing to a dedicated savings account will make it easier to track your progress and avoid dipping into it for non-emergency expenses.
Work on your credit score: in a competitive credit market, where loan approvals are becoming more stringent, a healthy credit score is essential. Dispute any errors on your credit report and take steps to improve your score by paying bills on time and managing your credit utilisation (the amount of available credit you're using). Using Up powered by Experian, you can access your free credit report and review it for accuracy. The web app also offers valuable resources and personalised insights to help you understand and improve your credit health, increasing your chances of loan approval and favourable interest rates.
Grow your savings: once you have a handle on your budget and debt, and have established a solid emergency fund, you can explore different ways to grow your savings account with a higher interest rate, explore different savings options offered by your bank, or research government-backed savings programmes. The key is to find a savings strategy that aligns with your financial goals and risk tolerance. Remember, even small, regular contributions can add up significantly over time.
The road to financial fitness isn't a sprint; it's a marathon. Celebrate your small victories along the way. Every Rand saved, every smart debt decision made, and every step towards improved financial knowledge is an accomplishment. By focusing on steady progress, you can build a stronger financial future, one step at a time.
* Gerber is the head of data insights at Experian.
PERSONAL FINANCE