Tips to Increase your Financial Wellbeing


It might be a cliché, but knowledge is definitely power. Especially when it comes to making informed decisions about your personal finances and debt. Below are some valuable tips which you can use to protect your financial interests and increase your overall financial wellbeing.

  1. Know Good Debt from Bad: Good debt means you are able to borrow money and repay it on time. This way you are able to build up a good credit record, which enables you to borrow in the future. On the other hand, bad debt means you take out a loan, but are unable to repay it on time and you do not have enough money to live on.

  2. Shop Around: Ask for a quote before you take on any debt. You have a right to this in terms of the National Credit Act (NCA). Under the Act, you are not allowed to be charged more than the NCA interest rate limit on your loan and other credit agreements each year. In addition, if the credit provider insists that you take out credit life insurance, you can use an existing policy. You are not obliged to make use of the credit providers’ credit life insurance.

  3. Be Honest: Do a proper budget and ensure that you can afford the repayment. You should not be spending more than 35% of your salary (after-tax) on monthly debt repayments. If you rely on commission or overtime to obtain a loan, make sure this is sustainable before you borrow.

  4. Reduce Interest Repayments: If you can save some money and use this to offset the amount you borrow, you can greatly reduce the amount of interest that you pay. Avoid using the budget facility on your credit card as this simply extends your repayments with the result that you end up paying more in interest.

  5. Be Proactive: If you have difficulty paying back the amount you have borrowed every month it should serve as a warning sign that you are running into financial difficulties. Talk to your credit provider as soon as you think you may not be able to repay them so that you can renegotiate the terms of the loan. You also have the right to make use of a registered Debt Counsellor, who will help you to reschedule your debt, when you are over indebted.

  6. Be Punctual: Pay your debt or accounts on time. If you do not, this information is reflected on your credit report. When you have difficulties with your repayments, pay what you can afford – don’t stop with repayments. This will be an indication to your credit provider that you are attempting to repay the loan and this is normally accepted in good faith.

  7. Know the Terms and Conditions: When you are in trouble with your repayments, your credit provider can sell these assets or items on your behalf. However, they also have a right to collect the difference from you irrespective of what they sold the assets for. The alternative to returning assets on a voluntary basis is to sell the assets yourself or to apply for debt counselling where your repayments will be rescheduled in line with your budget.

  8. Protect Assets: If you purchased a vehicle on credit, you must keep it insured. If you do not, the bank has a right to remove the vehicle on a temporary basis until you provide them with proof of this insurance. It is also good to shop around in order to get cheaper cover if possible. Make sure your home insurance is also up to date.

  9. Rainy Day Fund: Create an emergency fund and plan for major expenses. As a minimum, it is a good idea to keep an amount free on your credit card limit for emergencies.

Remember you can also contact the National Credit Regulator on 0860 627 627 with any credit related enquiries who is there to protect you as the consumer.

If you would like to learn more about how you can manage your money better, Compuscan Academy has a workshop on the subject. You can contact us at Tel: +27 21 888 6000 or e-mail us at info@compuscanacademy.co.za

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