Current economic times are tough and uncertain. Citizens face regular fuel and food price hikes/drops, negative fiscal predictions, political agendas are interfering in the economic processes and the country’s downgrade status is slowly showing its effects. Lately, it is no wonder that consumers find it quite challenging to keep their personal finances afloat.
But, although it is difficult to push those finances to victory again, it is certainly possible says Matthys Potgieter, spokesperson and debt expert at DebtSafe. “Consumers have to remind themselves that cash really is king and that their financial position will continue to deteriorate if they don’t increase and improve their personal cash flow.”
Here are a few ways to ‘open up’ and better manage personal cash flow:
Take a look at spending leaks
These days, phone apps and pre-arranged budget sheets make it easier for consumers to track their bills and spending leaks. Investigating bank statements also comes in handy. “And a bit of self-discipline is a good way to go, like cutting on those daily fancy coffees or bought lunches such as takeaways,” says Potgieter. It all adds up in the end – making no room to save some extra cash.
Keep an eye on fixed and varying expenses
Consumers need to be careful when it comes to their fixed (such as cars, loans or bonds) and variable (like groceries) expenses. “This can easily reflect as so-called bad or negative cash flow especially if they use credit for it,” says Potgieter. Consumers need to do away with credit (where they can) and cut down on unnecessary costs (DSTV subscription, gym membership that they don’t use etc.). This will open up a whole new world to an improved personal cash flow.
Boost monthly income
Individuals can furthermore improve their cash flow by boosting their income:
- Using the existing skills they have (like offering freelance editing).
- Selling unused items via various online platforms (like OLX).
- Considering a side job for a second stream of income (like doing weekend deliveries).
- And by making use of existing assets (renting out an extra room in the house, for example).
Get rid of high-interest rate debt first
Potgieter recommends that individuals should tackle their highest interest rate debt first, like credit cards or fixed term loans.
Say a consumer is paying off a home, personal loan or vehicle finance and has a bit of savings available. The lump sum can be paid into his or her credit for example and the creditor has to be notified. The creditor can then lower the consumer’s monthly instalment. If, however, the consumer does not ask the creditor to capitalise the payment towards his or her principal debt, then the monthly instalment will not decrease automatically. And as a result, the consumer will continue to pay the exact instalment amount as before. This means that the consumer’s debt can be paid off sooner than expected.