No proper financial planning equals frivolous spending

While South Africa’s annual inflation rate has fallen to 4.4% in August 2024, its lowest since April 2021, the cost of living remains a major financial concern for many consumers.

Despite the slight drop in inflation, many South Africans are still struggling with cash flow issues, making it difficult to focus on saving opportunities that could improve their overall financial well-being.

Thabo Qoako, consumer financial education specialist at the Momentum Group Foundation, emphasises the importance of having a financial plan to understand and control your cash flow.

“When you have a financial plan in place, you are better equipped to manage your cash flow and make informed decisions. Financial well-being should always be a top priority to balance spontaneity with the protection of your personal financial goals. A little financial planning ahead allows you to enjoy a well-deserved break this festive season without added stress.”

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Financial planning integral part of daily life

Qoako also points out that World Financial Planning Day last week serves as a crucial reminder of the value of making financial planning an integral part of daily life. “Planning enables people to make more informed choices around earning, spending, saving and investing, ultimately allowing them to achieve their financial goals in a systematic way.”

According to Debt Busters, South Africans, particularly women who are excessively affected, face heightened financial pressures in 2024. Qoako says it is alarming that nearly four out of five South African women report experiencing significant financial stress, a rate that far exceeds that of their male counterparts.

“This stark reality highlights the urgent need for effective financial planning and support, especially for women navigating these challenging economic times.”

Debt Busters’ findings also indicate that lower-income earners are most stressed about paying debts, with additional concerns such as school fees adding to the burden. Meanwhile, higher-income earners are primarily worried about securing their retirement.

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Financial planning can ensure financial wellness

“The road to financial wellness begins with letting go of the shame surrounding debt and seeking clarity on financial misconceptions,. There is no shame in seeking guidance from a financial advisor during tough times. Prioritising financial planning and seeking professional support can help you break the stigma of debt and take proactive steps toward a more secure future.”

Qoako believes that financial stability comes when individuals can live without the constraints of financial anxiety. To achieve this, they must be realistic about financial planning and recognise the steps required to meet their goals.

“A clearer understanding of your finances is possible when you acknowledge your current circumstances and gaps, seeking knowledge and setting defined goals. This approach provides better control over your budget and helps improve your financial lifestyle,” Qoako says.

“Most importantly, you can enjoy this coming festive season without sacrificing your peace of mind or enduring financial stress.”