How to combat debt and make your salary last till the next month, according to financial expert

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We spoke to financial expert, Vangile Makwakwa about how to combat debt and make sure that your salary lasts till next month.
We spoke to financial expert, Vangile Makwakwa about how to combat debt and make sure that your salary lasts till next month.
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It's almost payday and you are already dreading the debit orders.

Or you've already been paid and most of your money is gone and you have no idea how you are going to stretch what's left for the rest of the month. 

DRUM speaks to Wealth Money founder and personal finance coach, Vangile Makwakwa about how South Africans can best stretch their salaries out till the end of the month.

Vangile says there’s an emotional connection between people and money and it’s important to know how we feel before we open our wallets.

“Before you spend your money and pay your bills, sit back and consider how it feels to have money. Observe the sensations in your body when you get paid. And when you look at your bills, play close attention to how you feel after paying them,” she says.

Read more| 5 ways to make extra cash during the Covid-19 pandemic

The way to make your salary last through the month is to change the way you budget.

“Forget traditional budgeting; it doesn’t work. You should start spending in accordance with your value system, so your budget needs to be in alignment with your values. If there’s an expense but it’s not part of your values, take it out of your budget. Then you will start spending money in a way that’s aligned to the vision you have for yourself.”

“Majority of people are spending money on things they don’t even like”

Vangile says that when people are forced to cut down on their spending, they become frustrated, they rebel and, when they finally do spend, they go on a spree like no other. She says it’s important to spend money on things you need and that make you happy in a responsible way.

“Look at what kind of debit orders you have. Make sure they are needs and you are paying for things that will sustain you in the long run. For example, it’s unnecessary to have five funeral policies – you need to be intentional about the money you spend.”

Here’s how to check out your debit orders:

  • Print out your bank statement and make sure you are aware of your monthly debit orders
  • Ask yourself if they are aligned with your values
  • If you have more than one funeral cover, ask yourself if you really need them all
  • Evaluate your life vision and ask if your investment debit orders are going to help you achieve your financial goals
  • If you are struggling with debt, make sure you make a debt-repayment plan.
  • “You have to list every single debt that’s going out of your account. I know this can be scary for people, as most of the time they want to hide their bills. But things do not change unless we want them to change,” Vangile says.

“List your debts from the smallest to the biggest amount – you want to make sure you pay the smallest debt as fast as possible. That might mean making double payments for the first few months. As soon as the smallest debts have gone, do the same thing with the bigger ones.”

Vangile believes debt is the reason why people’s salaries do not last till the next month. Avoiding payment of your bills will mean the amounts accumulate.

So, her three-pronged approach to stretching your income consists of getting rid of debt, cancelling unnecessary debits and throwing out investments that don’t make sense.

“Before you take out investments, go and sit down with a financial advisor. Ask questions to help you understand the many options you have, like saving on your own or opening a 48-hour trust fund.”

Finally, Vangile says it’s important to review your salary every year.

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“The best employers want focused employees”.

“Inflation keeps going up every year, so having the same salary for years or having to cope with a salary cut is not fair. If you have fair employer, they should understand that employees need to cover their bills so they can focus on their work rather their being stressed over their finances.”

If necessary, explore additional income streams.

“There are ways to make extra income, such as building flats and renting them out. The best streams of income are the ones that pay you every single month.”

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