Bonus: Why not save?

2015-12-16 06:00

AS we race towards the end of 2015 and a well-deserved break, some of us are fortunate enough to receive a 13th cheque or bonus.

The recent interest rate hike has left many consumers unsure as to how they should be spending this extra money. The recent repo rate increase by the South African Reserve Bank may steer many South Africans to use the biggest portion of their 13th cheque or bonus to service their debts. This, however, leaves very little available to save or spend on festive season activities. “This year, more than ever, consumers should consider saving a portion of their 13th cheque or bonus. This extra end-of-year income can assist to not only settle some of their expensive debt, but also provides consumers with the opportunity to gear towards a financially-sound start to 2016,” says Lezanne Human, CEO of a popular bank’s Savings, Investments and Fiduciary arm. By saving, you can ensure that you are prepared for expenses such as school fees, back-to-work expenses and annual premium increases; but also that you have a buffer for emergencies. As you earn interest on your savings, you stretch your bonus further.

Making inroads to expensive debts

You do not have to pay off all your debts at once. Pay off your higher interest-bearing debt. This will assist you to reduce outstanding capital amounts, which will reduce interest charges and monthly repayments.

Financial stock take

Review your savings and expenses. Once you have a snapshot of your financial position, you are in the best position to draw up a budget which puts your extra money to good use and you then need to do your best to stick to it.

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