We live in a time in which the cost of living is constantly on the rise, public and private transportation has become a luxury as opposed to a commodity, and rising food prices constantly make our shopping baskets smaller, filled with less of the products we want and more of the essential day-to-day items.
Your money and how you manage it are some of the most important things in your life, since they influence almost everything you do. It is important to be able to distinguish between your needs and wants. Needs are essential goods and services you require in your daily life. Wants are those things you desire. Now, using a budget to help you manage your income, spending, debt and other liabilities carefully has never been more important. The aim is to take care of your basic living expenses as well as put aside amounts for savings to meet your other goals.
South Africa has a poor savings culture with only 39% of our population having an emergency fund. An emergency fund is an account (or your piggy bank) that is used to set aside funds to be used in an emergency.
While an emergency fund may be ideal, that can seem impossible for most of us, given how many of us don’t have enough cash on hand to cover even an unexpected emergency. It’s hard enough with so many other wants and needs emptying our wallets. For instance, these emergencies can include; the loss of a job, an illness or a major expense, urgent payment of school fees and medical emergencies, (buying that designer handbag you have had your eye on should not constitute an emergency). It’s also impossible to know how much you’d need in a worst-case scenario (picture all of the above, and now the car is making a funny noise).
Try figuring out what you’d do if you had a financial emergency and you might discover that you already have some options. Depending on the type of emergency, the amount of funds required and for how long, a credit facility may be your shoulder to lean on in a difficult situation. There a various financial products that may cater to your needs, for example, medical credit facilities. It is crucial that you weigh your needs and wants against each other before committing to a credit facility.
You may qualify for a short term loan once you provide all the necessary documentation to show you have a stable cash flow and that you meet the affordability requirements as stated by the National Credit Act. It is absolutely important to submit accurate information. For example, when you state your net or gross income, don’t inflate figures to a point that they don’t match what appears on your salary slip (we all go into ‘dream-mode’ when these details are asked). These little details affect your ability to qualify for a loan.
In addition to submitting accurate information, it is also important to apply for a loan when you are in need of one. If your finances can be managed correctly and you can stick to your budget then having to apply for several loans at a time should not be the norm for you. It cannot be stated enough that you should borrow responsibly because somewhere down the line if you abuse your line of credit, you may find yourself experiencing difficulty when applying for loans in the future.
Loan providers in South Africa are strictly monitored by the National Credit Regulator (NCR) and financial service providers in South Africa are committed to their client’s financial health and future. In the event of you experiencing difficulty in repaying your loan, you need to contact your financial service provider. Many clients dodge the calls and find themselves in the hot-seat after not being able to be up-to-date with their installments. This can be avoided with a simple and often pleasant chat with your financial service provider as they will assist you in creating a new repayment plan until you are on your feet again. A single call to them can save you a lot of stress and stop any further damage to your financial future.
In conclusion, it is important to use this type of credit responsibly. You need to take an active approach in managing your finances and examining your needs and wants before committing to any form of credit. It is also important to submit accurate personal information and financial details when applying for a loan. Taking out a personal loan can help you relieve your debt load and cover unexpected costs, but take stock of your options before settling on one choice. Borrow only what you need and repay your debts on time and you’ll thank yourself later.