Rising inflation rates and stagnant incomes have created a situation where more consumers have turned to credit cards and personal loans to make ends meet, according to Neil Roets CEO of Debt Rescue.
Consumers are under financial pressure following increases in the cost of food and petrol.
Roets said: “It’s clear that South Africans can no longer cover their basic costs – with many turning to credit to cover their shortfall. Yet the only way out of the debt trap is to cut costs and save wherever possible,”
Here are 4 tips to help you start saving even if you are in debt:
1. One seed at a time
Do a thorough inspection of where you can cut down costs by having a close look at the expenses. Getting a clear picture of your financial situation will help you take charge of your income.
A good way to approach a savings plan is to plant one seed by having a good look at your expenses and cutting one small cost every month, then building from there. This will be the first seed in your savings plan that can grow step by step.
2. Save money for emergencies
Shave off some money from your monthly expenses and put it away in an emergency fund for a rainy day. The fund will be useful when you have an unexpected emergency instead of going into debt.
3. Change your shopping habits
Changing or tweaking your grocery shopping habits is a good way to save more money. You can change your shopping habits by:
- Checking newspapers for special offers.
- Shopping at stores in close proximity to each other to save on fuel.
- Setting a grocery budget before your shopping trip.
- Doing online shopping to avoid the impulse items at the checkout aisle.
4. Close the gap
People whose expenses are more than their income are on track to spend any savings they may have, potentially taking on debt.
“Now is the time to find something that will close the gap between what you earn and what you spend,” Roets said.
Get that side-hustle that you have always wanted to start off the ground, or a new side job.
You can rent out the spare room in your house with Airbnb or put your culinary skills to use by starting a baking business. People can take on an extra jobs like bartending, waitressing, house-sitting or tutoring to earn more money.
“My advice to those who are in a debt trap is to remember that you are not alone. Seek help from a registered debt counsellor who can assist you to manage your financial predicament,” Roets said.
“It’s clear that South Africans can no longer cover their basic costs, with many turning to credit. Yet, the only way out of the debt trap is to cut costs and save wherever possible.”
