Tips for Effective Financial Planning and Credit Health
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Bayport Blog

Financial planning is not about luck

Published: February 3, 2020
Categories: Financial wellness
Tags: Budgeting, Credit Health, Financial Health, Financial Planning, Financial Tips, Managing your Money
Save, budget and plan for good financial health

Making your money work for you is not about luck; it’s about the four steps that take you to financial wellness. We know that as a nation we are not particularly good at saving money.

Many people don’t have emergency cash to deal with unexpected personal or family emergencies, and many are unlikely to enjoy a comfortable retirement. Faced with these challenges, one can be tempted to buy a Lotto ticket, or bet on the horse everybody says will win Saturday’s big race. The problem with this course of action is that you have no control over the outcome.

The smart option is to implement these four steps to financial health:

  1. Know your Credit Score

    Know your financial health and what you should do to improve it. Your credit report tells you how creditworthy you are, and what you should do to improve your credit score.

    A credit report is a detailed account of your credit history. Credit bureaus collect information of all your credit transactions and use it to create your credit report. Credit providers use credit reports to help determine your creditworthiness. You are entitled to one free credit health report per year from a registered credit bureaus.

  2. Improve your Credit Profile

    There are a number of ways in which you can improve your credit score, such as paying off your loans and credit card payments on time every month; avoid opening many credit cards and accounts over a short period of time; avoid applying for too many loans from multiple credit providers at the same time.

    Rather than closing your account when it is paid up, keep it open – but paid up in full, provided there are no monthly fees or costs being incurred – so that the credit providers can see that you have a history of accounts that are in good standing and paid up in full.

    If there are any mistakes in the report, it is your responsibility to inform the credit bureau immediately. And remember to always keep your personal information safe and report any fraudulent transactions to the South African Fraud Prevention Services (SAFPS) on 0860 101 248.

  3. Effective Budget Planning

    Draw up a personal budget and stick to the plan. Track your spending so that you know where your money goes. A personal budget is important for effective budget management because it helps you to understand where your money goes every month and warns you in advance of potential money problems.

    Being continuously aware of your money situation helps you to plan better and reduce unnecessary spending, and make more informed decisions regarding the impact of your financial decisions by knowing in advance whether you can afford new personal debt or unplanned spending.

    Effective personal budget planning puts you in charge of your finances and helps you feel in control of your own money.

    Budget Planning Tips:
    • Always be 100% honest with yourself about your affordability, and do not underestimate your expenses.
    • Keep your budget simple. There are many budget planning tools that you can use to structure your personal budget.
    • Take note of what you spend and use this record to adjust your next month’s budget if necessary.
    • Make provision for saving money in case of emergencies.
    • Use credit wisely and only borrow money when you know that you can comfortably afford the payments.
  4. Stay on top of your Debt

    It is important to stay on top of your debt in order to maintain a healthy credit record and to ensure that you are able to apply for credit and personal loans and become eligible to qualify for lower interest rates in the future.

    If you are unable to repay your debt, there are a number of things you can do:
    • Let your credit providers know in advance before payments are due.
    • Negotiate a new agreement with payments that you can afford, and then stick to the new arrangement.
    • Do whatever you can to prevent legal action from being taken against you to avoid more costs or charges being added to your already existing debt.

    Should you become over-indebted that you are unable to make arrangements with your credit providers, then you apply for formal debt counselling through the National Credit Regulator on 0860 627 627.

  5. Grow your Money

    Start getting into the habit of saving money every month so that you have an emergency fund and money available to spend on special occasions. Far from spoiling your fun, saving helps you to be prepared for emergencies, provide for your family without getting into debt and achieve your short- and long-term goals, such as education or retirement faster.

    Here are some helpful savings tips:
    • Make saving a priority. Have a savings plan that is part of your monthly budget, and stick to it.
    • Pay off debts as soon as you can and then save the money you used to pay on instalments.
    • If you own a car, remember that your car’s value depreciates every year. Negotiate a lower premium with your insurance company and put the savings away.
    • Give up expensive habits, such as drinking, smoking, gambling or unnecessary or extravagant dinners and entertainment.
    • Consider including your family members as part of your savings plan and have fun with it.
    • Consider putting your saving into a separate account and do not touch it until you have reached your savings goal.

By following these guidelines you will quickly make your own luck when it comes to your financial wellness.

How to get a Credit Health Report?

If you are a Bayport customer, simply register for your credit report on our website, complete a brief verification process and we will make your first report available to you at no cost.

Should you wish to discuss the various debt management and credit options available to you, contact a financial wellness consultant at Bayport Financial Services who will guide you through the process of applying for a personal loan responsibly.

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