Five Wealth Habits To Break The Debt Cycle
Findings show that South Africa has one of the highest debts as a percentage of GDP among emerging market economies and the majority of the indebted are women!
According to a World Bank report, the National Credit Regulator shows that up to 10 million South Africans are severely in arrears on their debt with Debt Rescue’s internal statistics showing that more than 51% of the indebted consumers are women, identifying the main debt incurring areas among South Africans as personal loans (94%), credit cards (84%) and store cards (76%). Lianne Lutz of Women’s Wealth says, “These figures are even more disconcerting when you consider that male-headed households have a higher income (R165 853) than their female counterparts (R98 911), according to the Living Conditions Survey 2014/2015 (released in January 2017).” So, are we fated to remain in an eternal debt cycle or is there a solution to gaining more control of our financial destinies?
PDM graduate Kerri Lutz, who forms part of the dynamic mother and daughter team of Women’s Wealth says, “Building wealth is not just about how much you earn. It’s about how you handle both your earnings and yourself that impacts on your financial situation.” The key to growing wealth comes down to establishing wealth-building habits that facilitate developing the right attitude and actions towards growing your money.
Develop awareness of your money mindset
Create awareness of your financial mindset by asking yourself questions such as: Was money freely available? Was money used as leverage or a form of control? What were the emotions around asking for money in your home? Lutz says, “By becoming aware of these thoughts, we can challenge our current beliefs about money, and choose to develop a new, more empowering attitude towards growing your money.
Know and write down your top three financial goals, so that you can apply the best savings strategies to help you achieve them. These may include short-term savings for a wedding or holiday, medium-term investments to help you put away money you may need to access in the next five years (such as savings for buying a house or a car). Long-term investments of 10 or more years can consist of shares, stock markets, retirement annuity and education policies.
Start eliminating debt
Remind yourself that paying off your debt is the first step in your journey to saving. Remember the following:
Always pay off your debts.
You can use your access bond as forms of debt consolidation (i.e. borrow money from your bond to buy your car instead of being financed by one of the finance houses).
Pay off your highest interest-bearing debt first.
Set a goal to add extra money to your minimum payment amount. You will be surprised at how it helps to decrease your payment time. Once this is paid off, start on the next highest interest-bearing debt.
Once your debt is paid up, start setting up your various saving avenues.
Change your focus
Focus on abundance and not scarcity by paying attention to what you have rather than what you don’t have. Money should be a by-product of what you do. Therefore, when you provide a service or a product, do it wholeheartedly and with good intentions, without money being your number one priority. The money will come to you anyway. Your focus must not be on how much money you are going to make, but rather on the quality of service you are going to provide.
Budgeting is a key starting point, although it isn’t an easy habit to implement. The trick with budgeting is to reframe it as ‘smart spending’, this can include inviting a friend over for coffee instead of going out or opting for the cheaper pair of shoes; also include some fun activities such as movies with friends or a date night.
Source: Women’s Wealth. Image: Pixabay.com