The price of fuel, oils and fats, meat, wine, milk, eggs and cheese and electricity have all increased from December 2020 to December 2021, and with further hikes in fuel and electricity expected – now would be a good time to get one’s financial house in order to avoid taking on additional debt.
Ithala, a pioneer in banking the unbanked, is keen to take ordinary South Africans through the wealth creation journey and continues to drive conversations that encourage financial prosperity, this is done through its financial literacy programme called Ithala MoneyTalks.
With South Africa’s unemployment rate having climbed through the roof, and wages on a downward trend, affordability has not been in our favour for the last two years. The one upside of this is that it has contributed to an easing of debt levels as banks are not lending due to consumer affordability issues.
The South African Reserve Bank recently announced the decision to hike the repo rate by 25 basis points to 4%. But what does this actually mean for property owners, and why should prospective buyers care if the repo rate falls or increases? While unfair, it is inevitable that the consumer will, unfortunately, have to absorb the higher costs.
Moreover, at Ithala SOC Limited, we have started to see some of the unhealthy spending trends, and that many people who never thought they would see themselves in debt have fallen behind, and sadly many have become over-indebted. Seeking the right help, at the right time for the right process is key to getting debt under control.
Just because you can afford more; doesn’t mean you should spend more. Here are 6 common financial mistakes and how to avoid them in 2022
- Spending like there’s no tomorrow
Studies reveal that friends and social media have a massive impact on our spending, often influencing us to spend unnecessarily on things we don’t need.
Ask yourself if the items you keep paying for month-after-month and year-after-year are really necessary. They may be tempting in the moment, but they can cost you in the long run. After all, every rand adds up.
- Not having an emergency fund
Most people are often unaware of the need for an emergency fund and don’t consider saving for one. Among the many lessons 2021 taught us, one is how quickly things can spin out of control. At any time, the unexpected could happen, such as a family member who’s in need, a broken laptop, car troubles, and unforeseen medical expenses.
- Not building any credit
On the other hand, we’ve noticed here at Ithala SOC Limited that most people wait too long to create credit. Not having a credit history can set you back in the future by making it hard to borrow. You may have trouble qualifying for personal loans or renting an apartment even if you have a strong, steady income.
- Not investing
One of the most common mistakes people make is not investing their money early because they think it’s not something they’ll have to worry about until later in life. We’ve noticed that most people also don’t see the need to save and invest money because they have fewer expenses and would rather spend that money elsewhere. However, young people have a huge advantage to saving and investing early because their money has time to grow.
- Not saving for retirement
Young professionals often put off saving for retirement because they think of it as something that’s very far away. But don’t wait! You’ll be grateful down the road if you start early. The advantage of investing for retirement when you’re young is that your money has much time to grow and compound.
- Rushing into new car payments
Common mistakes I often see people make is rushing into new car payments or buying a car they can’t afford, which ends up hurting them in the long run.
It is often said that the total value of your cars should never be more than half of your annual salary. Additionally, first-time buyers should be cautious of payment plans that come with longer financing terms, low monthly payments, or zero-down payment offers. While they may seem more attractive and convenient in the moment, they can be deceiving, hiding the true costs of a car and creating a bigger expense in the long run.
Ithala believes that redefining what wealth means, educating, and giving South Africans the necessary tools to manage their money, can help address the triple challenges of poverty, unemployment, and inequality.
A current distribution network of 38 branches in KZN provides convenient transacting facilities. Ithala offers a comprehensive portfolio of corporate and personal banking solutions. For more information visit www.myithala.co.za, call 031 366 2500.
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