South Africans are surely getting into the rhythm of change. And, although the spotlight is currently focused on the political side of things, the economic picture of the country is still a bit blurry and, the economy is not out of difficulty yet. It is therefore no wonder that consumers continue to find it challenging to keep their personal finances afloat. But, although it is hard to push personal finances to victory in uncertain times, it is certainly possible says Matthys Potgieter, spokesperson and debt expert at DebtSafe.
“Consumers have to remind themselves that cash is the way to go and that their financial position will deteriorate if they don’t get their cash flow going in a proper manner,” highlights Potgieter.
Here are a few ways to create and better manage personal cash flow:
- Take a look at spending leaks
Phone apps and pre-arranged budget sheets are available to make it easier for consumers to track their bills and spending leaks. Investigating bank statements also comes in handy. “And, a bit of self-discipline is a good way to go – cutting out those daily fancy coffees or bought lunches such as takeaways,” says Potgieter. It all adds up in the end – making no room to save some extra cash.
- Keep an eye on fixed and varying expenses
Consumers need to be careful when it comes to their fixed (such as cars, loans or bonds) and variable (like groceries) expenses. “This can easily reflect as so-called bad or negative cash flow especially if they use credit for it,” says Potgieter. Consumers need to do away with credit (where they can) and cut down on unnecessary costs (DSTV subscription, gym membership that they don’t use etc.). This will open up a whole new world to better their personal cash flow.
- Boost monthly income
Individuals can furthermore improve their cash flow by boosting their income:
- Using the existing skills they have (like offering freelance editing).
- Selling unused items via various online platforms (like OLX).
- Considering a side job for a second stream of income (like doing weekend deliveries).
- And, by making use of existing assets (renting out an extra room in the house, for example).
- Get rid of high interest rate debt first
Potgieter recommends that individuals should tackle their highest interest rate debt first, like credit cards or fixed term loans. This is also known as the avalanche method.
Say a consumer is paying off a home, personal loan or vehicle finance and has a bit of savings available, for example. The lump sum can be paid into his or her credit and the creditor has to be notified. The creditor can then lower the consumer’s monthly instalment. If, however, the consumer does not ask the creditor to capitalise the payment towards his or her principal debt, then the monthly instalment will not decrease automatically. And, as a result, the consumer will continue to pay the exact instalment amount as before – paying his/her debt off sooner than expected.
By using the above tips, consumers can enable themselves more cash flow and get rid of their debt faster. DebtSafe’s team also offers assistance for those who feel completely defeated by their debt at this stage. They can SMS their name and INFO to 30898 (free) to get their debt-free journey going.