The first two and a half months of the year have come and gone, and if they have not done so already, now is the ideal time for South Africans to put a clear plan in place for how to meet their financial obligations.
According to Siyakhe Masiye, spokesperson for MiWay Insurance, although everyone has a different style of managing money, there are a few principles that have stood the test of time when it comes to laying a foundation for financial security.
“These steadfast principles can all be applied to the way in which people view insurance, how they mitigate risk, and how all these important actions fit into their broader financial plan,” says Masiye.
Masiye provides three tips for financial planning in 2024.
The important thing to note is that there are many ways to save. Photo: Andre Taissin/Unsplash
Negotiate to save
It is no secret that many South Africans find it difficult to save, and to do so consistently. The cost-of-living crunch has dramatically reduced people’s disposable income.
The important thing to note is that there are many ways to save. These include making a commitment to set money aside at the beginning of each month, minimising expenses by cutting out on non-essential spending, sticking to a strict budget and limiting impulse buys. Another involves dedicating time to reviewing your policies to make sure that you are not over-insured. Over insurance occurs when you have bought more coverage than you need, leading to paying higher premiums. This can happen when you purchase policies without fully understanding the coverage you need or when you fail to update policies as needs change over time.
One solution is to explore the benefits of bundling, by consolidating multiple policies under a single insurer to potentially take advantage of discounts and enjoy reduced premiums.
Keep your credit in the clear
One of the central components of true financial freedom is keeping your credit in check. Not only is it important to avoid becoming over-indebted, it is also important to ensure that you can meet your monthly credit repayments and do so on a consistent basis to build a positive credit history.
It is important to revisit your budget and check that your monthly insurance premium can be paid on time and in full. Defaulting on an insurance premium could not only put your finances at risk, it could also compromise your credit health. If at any point during the year it becomes clear that you are at risk of defaulting on your premium, the best thing to do is to proactively contact your insurer, notify them of your financial standing and reach an agreement.
Make financial protection a priority
Purchasing a home, a vehicle and other valuable possessions, particularly in the current economic climate, is no small feat. For most South Africans, acquiring these high value assets takes time and hard work. In the event of damage, destruction or theft, the cost of needing to replace these assets can become an unaffordable financial burden as well as a source of stress and emotional pain.
When planning and mapping out financial priorities, it is important to ensure that proper financial protection makes the list.
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