Your finances might be tough to manage at times, but it is extremely important that you ensure you have enough money saved for a rainy day. But how do you manage to stay afloat? Here are a few signs to look out for, to avoid heading for a financial disaster!
1. You Don’t Have Any Savings
Solution: Schedule to have a manageable amount debited from your salary to build up a cash reserve. Emergency savings are just that: money for emergencies. You have to build up your savings for a rainy day and if you haven’t got any savings yet, it might be time to take action.
2. You Owe More Money on your Loan You Took Out To Buy Your Home Than You Could Get When You Sell
Solution: Apply to have your home refinanced. It’s one of the best ways to reduce your monthly instalment while improving your financial situation. If you refinance your home for its current value, you will have access to the equity value, which can significantly reduce your monthly repayments.
3. You Regularly Have to Pay Penalties and Late Fees
Solution: Set up bill reminders and schedule your payments in advance. You can create debit orders for some of your bills, scheduling them for a specific date that you know you will have money in your account. A good idea is to schedule them as close as possible to your salary date.
4. You Have Stopped Trying To Pay Off Your Debt
Solution: Consider debt counselling. If your finances seem too difficult to handle and your debt is mounting, consider working with a debt counsellor to help you reduce your monthly payments and get your debt paid off. The longer you wait the more interest will pile up and this can also negatively influence your credit record.
5. You Only Pay The Minimum Amount Due On Your Credit Card Accounts
Solution: By paying off only the minimum amount that is due each month on your credit card bill, you are essentially only paying off a small part of the charges and interests. Try to pay more than the minimum amount, even if it’s not much, to reduce the outstanding amount as fast as possible. The longer you will pay off your credit card the longer it will take you to potentially start saving money too.:
6. You Have Not Set Up a Personal Budget
Solution: Set up a budget or have a financial planner set up a personalised budget for you. If you don’t have a clear picture of how much money is coming in and how much you spend each month, you can easily fall into debt. You need to have a plan of action in terms of your saving goals, how much you can spend, and how much you need to pay on all your monthly bills.
7. You Have No Retirement Savings In Place
Solution: Join your employer’s retirement plan or set up a personal savings plan for your retirement. Without adequate savings you might not be able to retire when you need to, and might not have enough money to retire comfortably. A retirement plan is crucial; whether you want to save money in your own savings account or sign up for a retirement plan, make retirement funds a priority.
8. You and Your Spouse Are Not On the Same Page when It Comes to Finances
Solution: Find time to reach a compromise so that you can set clear financial goals. If you are not on the same page when it comes to money and finances, you need to deal with the fact that you may have different financial goals, and should therefore have different approaches to saving and spending. Try to find common ground so that you can spend and save together instead of separately.
9. You Do Not Open Your Financial Documents
Solution: Get to the cause of the problem and find a solution. If you do not want to open your bank statements or accounts because you don’t want to face your financial situation, you need to seriously rethink your strategy. The information you receive is important for you to make the right financial choices and address any problems before they lead to a financial disaster. You also need to know whether your accounts are accurate, so take a day and go through your paperwork to ensure you are on the right track.
10. You Have Been Declined for a Loan
Solution: Work to improve your current credit score. If you have been declined for a loan, it might mean that your credit profile is not yet good enough, or you might have negative entries on your credit history. Obtain your credit score as well as a full report to assess your position and work to increase your score. This can be done by making payments on time and not applying for credit that you cannot afford.
11. You Do Not Have Enough Insurance
Solution: Know what you need and invest in an efficient insurance plan. If you do not have adequate insurance you won’t be able to get through unforeseen events like a retrenchment or disability. If you are no longer able to work, you need to know that you will be covered financially. At the minimum, ensure that you have health insurance to cover medical emergencies. Also consider home insurance as well as a form of disability insurance to make sure your family won’t have to suffer the consequences.