POLOKWANE – Stop! Do not cancel or withhold repayments on your bond, loans or other credit agreements you may have, in order to lower expenditure.

Shafeeqah Isaacs, head of financial education at DirectAxis, warned households who are feeling the pinch as they have had to deal with retrenchments, salary cuts or not being paid bonuses or incentives, to not be tempted to cut these repayments.

“Doing this will negatively affect your credit score and will make it more difficult, if not impossible to apply for credit, get a loan, a bond or car finance. It could also mean that you pay more interest,” she explained.

Isaacs says we might be surprised at how much we spend on things that aren’t essential and what we could save if we trim these expenses.

“Most of us don’t often take a careful, honest look at where we’re spending our hard-earned money, but it’s worth doing,” she added.

Tips from the national budget that households can apply

“Admittedly the scale is much bigger, but most South African households are grappling with the same problem as the finance minister – trying to do more with less,” she explained.

Just like the finance minister, people’s options are limited to either finding other sources of income or cutting expenses.

“There aren’t many options; ask the boss for a salary increase, grow your business or start a side-hustle. Reducing expenditure is often easier said than done and usually involves some compromise. Is it healthcare, education, safety and security, energy, social grants, infrastructure development or public service salaries?”

Households have similar difficult decisions to make

“Do you try to reduce bond or rental payments by selling or moving somewhere cheaper, take your children out of a private school, cancel medical aid policies or armed-response contracts?
For most people these aren’t viable choices, but careful consideration of how and where money is spent may deliver some savings,” Isaacs added.

Do you really need to drive the latest model car, wear the trendiest clothes, eat out quite so often or subscribe to services you don’t need or rarely use?

Credit score

“Your credit score tells people how financially reliable you are. A poor score limits your options, while a good score will enable you to access more financial opportunities,” Isaacs said.

Most South Africans don’t know their credit score, according to her.

“A good credit rating means you are regarded as low-risk, something that is considered favourably by everyone from landlords to financial service providers. Whether you’re finding somewhere more affordable to stay, need some money to grow a business, start a side hustle or even deal with an unexpected emergency, a sound credit record is an advantage.”

To encourage more people to find out how they rate and take better control of their finances, DirectAxis provides an online credit-rating tool, which is free. Once registered, users can check their ratings as often as they want by visiting https://www.directaxis.co.za/pulse/credit-rating.

Regular budget reviews

“The budget is the country’s financial plan and the reviews check how well it is being implemented. Similarly, regularly checking your household budget will help keep unnecessary expenses in check and allows you to see how much progress you’re making towards your financial goals. Your credit rating will provide an independent check on whether you’re heading in the right direction,” she concluded.