There is no getting around the fact that financial stress is a major issue in South Africa.
The latest interest rate hike will lead to a higher cost of living for South Africans.
Many aspects of daily life are impacted by money (like buying groceries, paying rent or a bond, accessing healthcare, and providing for our families).
If you feel that your mental health has taken a knock lately, you’re not alone. It's known that financial constraints pose a significant risk factor for a plethora of mental health issues.
Financial literacy may just be our saving grace.
The monetary policy committee of the South African Reserve Bank recently raised the repurchase rate by 75 basis points, from 4.75 % to 5.5 percent. This is the fifth rate hike since November of last year.
So, instead of stressing about things that are beyond our control, like the increase in interest rates, we should focus on the implications of this current reality as South Africans and how we might be able to mitigate those effects.
Sanlam Savings' Farzana Botha offers her perspective on how consumers might start to shift this focus.
“The reality is that most of us lack the self-awareness necessary to recognise the behaviours we are taking, could ultimately have an impact on our financial situation, regardless of whether we fall into the medium income or low-income tax bracket.”
Instead, we should take or do some self-reflection, behaviour patterns, and what choices we can make right away to move to a better position, she says.
Another approach is being aware of the services that have been set up to help reduce some of the stresses we are currently experiencing.
This is done to allow money to work for you as effectively as possible, which is what consumers must do in order to learn more about financial literacy.
Botha asserts that the word budget almost has a negative connotation because we almost feel like it's a self-imposed punishment and it's restrictive, but what a consumer should do is create money efficiencies.
It is critical to understand the fundamentals of financial management, such as saving toward a goal, be it buying a house in the next five years or a car, knowing what you’re saving towards is important because it’ll give you boundaries.
In our current economy, not everyone has the ability to save money. However, there are several ways to beat the system and capitalise on it, such as structuring your money so that you can become proficient in the way you spend and discount purchases. This is a mindset that we need to adopt across all of our spending, reiterates Botha.
“So, instead of looking at the budget in a negative way, rather find a way around it”.
She advises trying different ways of saving rather than focusing on just one. If you save with your bank, you can link your money market account to your cheque account and see how your interest grows over time. The ability to watch your money grow slowly encourages you to continue working on that.
“That is one method for keeping you motivated to think about financial stability.”
Financial wellness encompasses seeking the financial advice of a qualified professional, having money conversations, and educating people about finances so that their money is tailored to their needs because, that way, you are given relevant information based on your profile.
Read the latest issue of IOL Health digital magazine here.