Three tips to take control of your finances

With the turmoil of 2020 behind us and a return to something approaching normal in the first quarter of 2021, now is a good time to take stock of your finances.

Benay Sager, head of DebtBusters, said consecutive lockdowns had affected most people’s finances. Payment holidays and successive repo rate reductions provided much-needed temporary relief, but now consumer spending patterns were adjusting and lenders were asking for their money back.

“Although things may seem to be returning to normal, it’s still a very difficult and uncertain environment. Consumers need to focus on what they can control so that they can put themselves in a better position to deal with any setbacks as the economy starts to recover,” said Sager.

ALSO READ: Spotting the difference between good and bad debt

Sager suggested applying the following three steps:

1. Assess where you stand financially

Do an honest assessment of your financial situation using an online self-help tool. It may sound daunting, but other than taking a bit of time it’s an easy thing to do and will give you a perspective on where you are, help you set some goals and keep track of progress.

Alternatively, divide a sheet of paper into two columns and list all your income in the left column and all your expenses on the right.

Be as honest and thorough as you can. Your bank statements for the past few months, bills and receipts can all help build an accurate picture of how much you’re spending and on what.

ALSO READ: Consolidating debt extends the pain

2. Set reachable but stretch financial goals

These will depend on financial circumstances and will be different for everyone. At the same time, they should be informed by your own assessment in step 1.

For some, it may be planning to pay off short-term or unsecured debt, for others, it could be starting an emergency fund to cover unexpected future expenses, while those with some disposable income may consider investments as a good way to grow their money.

The important thing is to be realistic during the timeframe in which you are trying to reach your objectives. Meeting achievable targets will encourage you to aim higher.

ALSO READ: Youth urged to stay debt free

3. Don’t delay

If your assessment in step 1 finds that your monthly expenses exceed your income and you can’t find a way to rectify this, you may need expert help in the form of a debt counsellor. Find a reputable, registered debt counselling firm with qualified debt counsellors who will give you impartial advice and help you make the right decisions.

“Avoiding or ignoring the problem is a common reaction when people are struggling with debt and have fallen behind on paying for a home or a vehicle, but it’s not a solution. There are options, but it’s important to act before you face the possibility of having your house or car repossessed,” said Sager.

ALSO READ: Your rights when you have debt #WorldConsumerRightsDay