Financial stress is one of the leading factors that gives many South Africans sleepless nights. Not knowing what the future holds during a pandemic is equally stressful.
It also highlighted that not many people are prepared financially. But is there a way in which you can be prepared for the unexpected? How can you achieve this without leaving yourself financially exposed? We break down a few ways in which you can be prepared.
Switch to planning before saving
Saving is good. Planning is better. Handling your finances with the future in mind is a small change that can buy you enough time when unexpected things happen to you. While we may not know what tomorrow holds, financial planning can create a financial buffer that can make the difference between keeping afloat and sinking your finances entirely.
Having financial goals such as creating a financial safety net, paying off debt, and investing in things that can come in handy when you need it the most will be something your future self will thank you for. It will require discipline, but it will be beneficial in providing you with the financial security and independence you will need.
Be careful what you borrow money for
A golden rule when it comes to financial literacy is spending less than you earn. Not only will it give you enough wiggle room financially, but it also means you will be able to invest in things that put money in your pocket rather than take from it. The average South African has debt that starts at R40,000 and more.
Knowing the difference between good debt and bad debt can prevent you from falling into the red where you owe more than what you make. Furthermore, accumulating more debt than what you make can rob your future of financial security when you need it the most.
Instead, focus on borrowing money to back up calculated investments that will benefit you. Always ask yourself if what you are borrowing the money for will help increase your finances or take away from it. If you find yourself taking on debt to finance a lifestyle, purchase food or pay for other debt, you may require debt counselling.
Protecting your future today
Many of our financial stresses arise from situations that we had not prepared for. The future is not as far away as we think and not being prepared financially can take a huge chunk out of most people's already strained finances. The good news is that you still have time to prepare by planning today. Planning for the future could look like:
Invest in your retirement through a retirement fund or investments
Starting an educational fund for your child(ren)
Having cover that provides for you should you be temporarily or permanently disabled
Taking out life cover to provide for you and your loved ones
Always remember to plan your finances with the future in mind. This can start with putting aside an amount that you will be able to maintain for each month and gradually growing your financial safety net. The best decision you can make is to start.
