Five practical tips to help better manage your money
This past week, South Africans took to social media to discuss their money struggles and, as a result, the hashtag #salarydepression was trending.
While financial concerns were voiced, people also shared tips to help others take control of their financial lives.
The conversations showed an increasing interest from South Africans to adopt a money savvy approach to help them get the most out of their monthly salary.
Francois Viviers, Executive of Marketing and Communications at Capitec Bank said, "We know the current economic times are not easy but there are a number of ways to take control of your financial life and live better. Whether it’s cutting back on unnecessary expenses or growing a new income stream, you don’t have to be a victim of your current financial situation".
"As a bank we play an important role in helping our clients better manage their money. Our app uses zero rated data, which means you can get an overview of your financial behavior from anywhere, 24/7 at no cost. We’ve also been able to reduce costs through the implementation of relevant innovation, which we passed onto clients in the form of lowered bank fees, saving them over R227 million in the past 6 months. Furthermore we incentivize savings through higher interest rates from 4.75 percent to 8.55 percent, which amounted to R2.5billion in interest earned by our clients in the last 6 months. These are just a few ways we are helping people simplify banking to live better," added Viviers.
Here Viviers shares 5 practical tips to help better manage your money:
1. Cut back on unnecessary spending
How to make it work: Get up close and personal with your bank statement. Firstly, interrogate your monthly debit orders. Do you really need all the subscriptions you have? You may not be using those video or audio streaming services as much as you think. It’s also possible to cut back on the cost of some debit orders. For instance, if you feel you have managed your insurance policy well, call your insurer and see if they are willing to offer you a better rate.
Secondly, take a look at your disposable income. Where does your money go exactly? And how can you cut back on non-essential spending? For instance, a dinner at a restaurant may set you back R150, while deciding to eat in could save you R90.
When cutting back on spending many people overlook the cost of their bank fees. Check your bank statement to see what you are paying. Most bundle accounts cost around R110 to R350 per month. Do you really need all the services offered in the bundle? With a pay as you transact account, such as Capitec’s Global One, you only pay for the transactions you actually do. In the last year over 7 million Capitec clients payed less than R50 per month in fees.
2. Switch to digital banking
How to make it work: did you know that digital banking transactions are usually more affordable than ones that involve people or physical money? You’ll also save yourself time by not having to travel to your nearest branch or ATM. Download your bank’s app, register and start banking from anywhere, 24/7.
Most banking apps allow you to check your balances and bank statements in real time at no extra cost – a great tool when working towards a monthly budget.
3. Start a side hustle
How to make it work: Your corporate 8am – 5pm salary does not need to be your only source of income. Technology is making it easier to earn an income from the additional resources you have. For instance, Airbnb lets you rent out an unused bedroom in your house and many apps exist that allow you to rent out excess storage space.
Place the money you make from your side hustle into a savings plan rather than using it for everyday items such as clothing or movie tickets. The money will then earn interest and you’ll have additional money to grow your side hustle, increasing your earning ability.
4. Rethink credit
How to make it work: Not all credit costs the same. Store and credit cards often have higher interest rates than other credit. Use extra money to pay off these loans first. Consolidating your debt into a single loan with a lower interest rate is also a good way to save money.
Shop around to see which bank gives you a better interest rate on your loans and credit cards. Capitec’s credit card offers interest rates from 10% (prime) and personal loans are offered from 12.9%.
5. Ensure you’re earning optimal interest:
How to make it work: You worked hard to earn your money! So, make sure it’s working equally hard for you. Most banks don’t offer clients any interest on positive balances in transactional accounts. However, with Capitec, there’s no such thing as lazy money as you earn from 4.75% interest on your transactional account.
Pay yourself first by transferring the amount you want to save each month into a savings plan. Many people save by transferring the money they have left over at the end of the month, however, you’re likely to save very little this way. If you don’t need access to the money immediately use a fixed term savings plan to ensure you earn the highest interest rate possible.