We’ve all had to tighten our belts, but as interest rates come down and the economy improves it’s easy to slip back into comfort spending.
Stay cash conscious with our tips.
Bad Habits to Break
1.Stop being Needy
Do you ‘need’ a new lipstick – or do you ‘want’ a new lipstick? Don’t justify impulse buys by saying you ‘need’ something because you probably don’t. Most of the time what you really mean is that you ‘want’ it very badly. Remind yourself that if you really ‘need’ something, life is extremely difficult without it – and if you’ve managed to live without it so far, you can probably carry on going without it.
2. Don’t be Blinkered
Even the guys who look after your safety need watching on pricing, notes Durban financial planner, Peter Bolton. Security companies have increased some clients’ home-alarm monitoring fees by more than double so they’re paying over R600 a month, when they should be paying between R200 and R300. Vehicle-tracking fees are also increased every year and before you know it, your annual fees could be adding up to more than double the price of a new unit. Call your security and tracking providers and ask them to bring your monthly rate in line with the market norm.
3. Avoid Window Shopping
Don’t need anything from the shops? Then don’t wander round them – it’s just too tempting. Stop spending lunch breaks, Saturday afternoons and that last half-hour before you pick up the children from school at the mall… and you’ll keep your purse closed.
4. Don’t Rush into making a Big Purchase
If you plan to spend more than R500 on any one item, make yourself wait for 24 hours from the moment you fall in love with it to the moment you buy it. This allows you time to think about it and makes sure you don’t just buy the first thing that looks okay while you rest your tired feet. If you still want the item next day, then go and get it.
5. Bin the Cards
…the average South African has at least 10 credit and store cards
We’re a nation of plastic addicts with the average South African having at least 10 credit and store cards, according to one survey! If you pay the minimum – usually about 5% of what you owe – it’ll take more than three years to pay off just a moderate R5 000 credit card debt, says Darryl Lahner, head of credit risk at FNB Credit Card Division. In the process, at current rates, you’ll have paid more than R1 000 above the asking price of the goods you bought. Work on paying off each account, then close it and cut up the card until you’re left with a max of one everyday card, one for backup in case the first gives problems, and one store card.
6. Stop being Lazy
Don’t think that you can be efficient with money without putting effort into staying up to date. Financial websites and newspapers flag the best deals, discounts and current advice. Visit persfin.co.za; and justmoney.co.za.
7. Last Minute is Costly
Planning ahead can save you money. Plane tickets get more expensive the closer you get to departure, so book well in advance. Check out cheaper screening times at your local cinema or work out whether it’s worth joining a loyalty programme. Most museums are free and have a school holiday programme.
8. Dump the Assumptions
Cheap doesn’t always mean you’re saving money in the long run. Something that costs a little more may save you money if you can use it for twice as long, so assess anything you buy for cost per use or cost per wear.
9. Debit Order Dilemma
Paying bills by debit order might be convenient but the charge for this is usually higher than scheduling a time to pay by internet banking. Plus the cost of a debit order bouncing has shot up and is often now well over R50, so keeping track of your balance at key times of the month pays off!
10. Bank Accounts aren’t for Life!
The average SA consumer spends at least R200 a month on bank fees, according to justmoney.co.za. Imagine what you could do with an extra R2 400 a year! Make sure that you’re not running unnecessary accounts; that your account type suits the way you use your money now (rather than when you were a student or starting your first account); and that your bank is giving you the best deal with charges.
Good Habits to Make
1. Enjoy Some Pocket Money
Give yourself a set amount of spending money each week and stick to it!
2. Use Vouchers
We tend to be ambivalent about vouchers. They’re catching on, though, and with even more upmarket stores like Woolworths handing them out, there’s no need to be shy about using them. Not using discounts is like throwing money away: keep them in your purse or stick them on the fridge.
3. Sort out your Credit Rating
Without a good credit rating, you’ll pay more for credit, says Caroline Buthelezi, PR coordinator for the Credit Ombud. You’re entitled to a free credit profile once a year, she adds. Contact one of the main credit bureaux for details: Transunion (mytransunion.co.za; 0861482482); Experian (experian.co.za; 0861105 665); or Compuscan (compuscan.co.za; 0861514131).
If you have a problem with your credit profile that you can’t sort out with the credit bureau, get free help from the Credit Ombud (creditombud.org.za; 0861662 337). SA women are often ‘invisible’ to credit bureaux because debts are in their husband or partner’s name. Fix this by getting your own credit card and using it wisely, without incurring charges or penalties, and you’ll build your own credit profile.
4. Don’t be a Bank Snob
Shop around for your banking just as you would for anything else. Start by saving on the extra charges you get hit with for using a different bank’s ATM and/or transport costs by reassessing how close your nearest bank branch or ATM is to your home or work, advises Carl Fischer, Capitec Bank’s head of marketing and corporate affairs. For example, Capitec offers a flat rate of R3.75 for an ATM withdrawal and no charge for debit card purchases.
5. Choose Good Debt
Buying only what you need with a loan or credit creates what financial gurus call ‘good debt’. These are items that add value to your life, explains African Bank’s award-winning consumer adviser Marilyn Budow, such as paying off a home or paying for your child’s studies or work on your house. Bad debt is putting on account the new season’s looks, an irresistible kitchen gadget or an unforgettable DVD. Buy these with spare cash or if you’ve saved up for them
6. Remember to Budget
Yes, this is boring and time-consuming, but it’s the best tool to keep you out of the red and in the black. Download a budget planner at justmoney.co.za/guides-and-tools.
7. Be a Checker
Be a checker Everyone makes mistakes, so always check receipts, bills and statements. Be especially eagle-eyed checking those bank statements to make sure debit orders aren’t still running for policies you cancelled.
8. Don’t Forget your Debt
Write out just how much you owe and put the figure in the front of your wallet where you can see it. Every time you go to overspend, you’ll be reminded of debt.
9. Save Yourself
You might think you don’t have enough spare cash for saving but if you’re retrenched or your house gets repossessed, how and where are you going to live? Protecting yourself and your family is top priority – the financial buzz for this is to ‘Pay yourself first’ – before you make other monthly payments. Set up an emergency savings account that you don’t touch.
10. Keep it Zipped
Have one day a week when you spend nothing! It’s all too easy to draw another R100 out of the ATM when you don’t really need to. A bit of self-control on the financial front will do you no harm at all.
Text by Liz Barclay and Patricia Mccracken. This article was taken from the June 2010 edition of Essentials magazine.
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