It's a sad reality to which many of can relate. Each month, debit orders, living expenses and loan repayments swallow up a huge chunk of our net income, leaving us feeling as broke as though we never even got paid just a few days after getting our salaries.
Now there's research to prove how bleak the picture is for middle-income earners in SA.
It takes an average of five days for a middle-income South African to spend up to 80% of their monthly salary, and the remaining 20% of their monthly salary has to stretch for well over three weeks, according to new First National Bank (FNB) data reported on by News24 on Tuesday.
Middle-income earners who make between R15 000 and a bit over R40 000 per month spend most of their income in five days, the bank said. Many depend on loans and credit card to make it to the next pay day – and so the vicious cycle continues.
With the high cost of living, financial freedom can sound like a pipe dream but it is possible to achieve, says financial expert Tlalane Ntuli.
"No matter what financial troubles you have today, there’s always a way to get back on track," says the Metropolitan’s Chief Marketing Officer. She offers the following tips for those losing hope of ever getting out of the vicious cycle.
1. Review your financial status
To know where you are going you need to know where you are coming from. The first step towards realising your financial goals is to reflect on your current financial standing and what are some of the traits that have landed you in the situation you’re in.
Keep the good ones and work on the not-so-good ones. Reviewing your financial situation helps you to have a realistic look at where you are and what you need to get to where you need to be.
2. Start drawing up a monthly budget
Knowing where your money is going each month is a critical step. Ultimately, you need to reach a stage where you are in full control of your finances, and drawing up a monthly budget will help you achieve this. A budget is a simple process that gives you an instant indication of what you are spending your money on, helping you to identify where you can cut costs and how you can start saving.
Many people say they’ll start a savings plan but never commit to a date. By having and committing to a monthly budget, you can start working towards a savings plan. There are several budgeting templates available. You can speak to an accredited financial adviser or use the free budgeting tool available on the Metropolitan website.
3. Plan for the unexpected
If the past two years have taught us anything, it’s that life can be unpredictable, and it is therefore extremely important to plan for the unexpected. Having a savings fund for those rainy days can be helpful for situations you didn’t see coming.
4. Save something each month towards an emergency fund.
This will avoid you having to go into debt if unexpected situations strike. Ideally, emergency savings should be kept in a separate account to discourage you from dipping into it.
Instead of saving your money in a savings account at the bank, why not explore the option of investing in a unit trust account?
5. Consider your long-term goals
Saving money for retirement should be one of your long-term savings goals. It’s a fact that by starting to save early, you have a longer period in which to invest. Such investments help you plan for the future and ensure you have enough to achieve your long-term financial goals. The earlier you start the better!
6. Get the right information
As the saying goes, when we know better we do better. Have the right information on hand and create a plan that fits your needs and your pocket. You can do this by speaking to an accredited financial advisor.