How to be Sensible with your Financial Decisions


As an adult, one of the most important responsibilities is towards your finances. Every decision you make must be well-calculated in order to make sure you are not throwing your life’s savings out the window.

While this sounds like a good plan, experts warn us that it can’t be applied to everyone. As humans, we are emotional beings and most of our spending decisions are made because we feel strongly about it. For instance, there is no good financial justification for buying the latest smartphone design, but we do it anyway. The same goes for shopping sprees and any other rushed decisions that may land us in debt.

So how can one make sure they maintain a healthy financial situation, especially in a country like South Africa where general education is not yet accessible to everyone? The key is patience and some financial education to guide you on the way.

Below are some tips to guide you towards a healthier lifestyle (from a financial point of view) and teach you how to be patient and sensible in all your financial decisions.  

Be Sensible with Loans

Loans are helpful, but only if you know how to work with them. According to statistics, many South African citizens live on loans, but over 50% do it just to maintain a flashy, unrealistic lifestyle. If this is the case, taking a loan is not a sensible decision and it will only aggravate your financial situation.  

However, if you’re looking for a loan to start your business from the ground, this may be a step in the right direction. If you want to learn more about taking a secure loan and improving your credit score, take a look at Loans South Africa.

Avoid Debt

It may be easy to say, but staying out of debt requires a bit of self-control and planning. You should first make a quick analysis of your current situation and check where your money is going. Make a comparison between what you earn and what you spend and try to keep a close track of your expenses. This way, you can identify any black holes and cut off loses before it’s too late.

You should also make sure to pay all your bills on time to avoid being charged late fees or being sued. Finally, it is healthy to put aside something for emergencies in a savings account.

Consolidate Existing Debt

Debt consolidation is a great solution when you have several small loans. This practice allows you to take a bigger loan in order to refinance the existing ones. This way, at the end of the month, you’ll only have to take care of one rate, instead of two or three.  

It’s also a way to reduce the cost of the loan as you’ll only be charged for the one loan and not for each debt individually. It may be a bit bigger than what you’re used to, but it doesn’t go over all your loan costs combined.

Avoid Excessive Monthly Recurring Expenses

Recurring expenses come in all shape and sizes from the gym membership you’re not really using, to that magazine subscriptions to the energy bill. Of course, the list is a lot longer and it includes things that may seem normal like: your car, over indulging on Christmas shopping, or spending a lot on birthdays.

Some monthly recurring expenses are a must, but you must make a clear difference between the ones that are necessary and the ones that will only make you to overburden your mortgage. The expenses that are not on the must list should be cut off as soon as possible, in order to understand your real financial situation.

Not to mention that, by doing this, you’ll have the chance to send more money into the savings account and use it for more important things like the upfront payment for a house.   

As you can see, it’s not extremely difficult to get in shape with your finances. It just takes a bit of practice and accommodation. Also, make sure to ask for advice from professionals when you feel stuck and keep up to date with the changes in regulations.

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