The Pressing Debt Crisis in South Africa
Taking Charge of Your Finances
About 25 million adults in South Africa have incurred some form of debt, a situation that has continued to grow in recent years. Millions of South Africans are now under severe financial strain, with the cost-of-living crisis, unemployment rates climbing, and economic growth sluggish. With debt becoming a universal issue, you should explore ways to take control of your finances.
Mokgadi Selebalo - Debt Advisor
16 November 2024Do You Know Someone Struggling with Debt?
If you or someone you know is experiencing the pressures of debt, understanding where to seek help can make all the difference. Debt is a complex issue, often compounded by high interest rates, unexpected expenses, or loss of income. If you’re unsure where to start, we offer a supportive approach, unpacking clients’ debt situation, guiding them through their budgets and suggesting practical solutions to reduce financial strain. Start your wealth checkup now.
You can learn more about how they assist with debt management in their comprehensive guide on debt.
How Often Should You Assess Your Finances?
In a fluctuating economy, regular financial assessments are essential. Experts recommend evaluating your financial health at least twice a year to stay informed about any changes in your income, expenses, or debt levels. Taking a proactive approach to monitoring your finances allows you to identify potential issues before they become unmanageable. Frequent check-ins enable better budgeting, planning for the future, and avoiding costly financial pitfalls.
Solace provides you with the option to remain up to date with your finances by conducting a wealth checkup with our professional debt and budgeting advisors.
Managing Your Finances
To manage your finances effectively, consider dividing your income into three key categories: savings, debt repayments, and day-to-day expenses. Financial experts often recommend the following breakdown:
- Savings: Aim to save at least 20% of your income, which can include building an emergency fund, investing, and setting aside funds for future goals. For those managing debt, consider allocating some of this savings portion specifically toward building a safety net to prevent future borrowing.
- Debt Repayments: Ideally, keep your debt repayments at around 15-36% of your income. This allows you to steadily reduce debt without compromising your essential expenses or savings. If your debt obligations exceed this percentage, focus on strategies to lower them, such as refinancing or prioritising high-interest debt.
- Day-to-Day Expenses: The remaining portion of your income (about 50%) should cover your daily living expenses like housing, groceries, utilities, and transportation. To stay within this range, tracking and budgeting for essential expenses can help you avoid overspending and ensure funds are available for savings and debt repayments.
Using this framework as a guideline can help maintain a balanced approach to managing income, reducing debt, and preparing for the future.
How Solace Can Help You Regain Financial Control
Solace offers a tailored wealth checkup service designed to provide individuals with a clear understanding of their financial situation. Here’s how it works:
- Submit Your Details: Share some basic financial information to begin the review process.
- Financial Review: Solace experts analyse your income, expenses, and debt obligations.
- Personalised Report: Receive a customised report detailing your financial standing, highlighting strengths, and pinpointing areas that need attention.
- Connect with Consultants: Solace provides guidance on improving financial health, managing debt, and planning for future goals.
Through these steps, Solace empowers individuals to regain control over their finances. Learn more about their wealth checkup service here.
Why It’s Crucial to Schedule a Wealth Checkup
Financial Security
A wealth checkup is more than a financial overview—it’s a step toward achieving lasting financial security. By understanding your finances comprehensively, you can make informed decisions that align with your long-term goals and guard against potential financial crises.
The Impact of Neglecting Financial Health
Ignoring your financial well-being can have serious consequences, leading to unmanageable debt, diminished savings, and overall financial insecurity. Regular checkups help ensure you’re not only meeting your current needs but also laying a foundation for a stable future.
With Solace, you’re not alone
