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Saturday, September 22, 2018

5 Easy Ways to Improve Your Creditworthiness

Improve Your Credit Score

Rebecca is a young professional who has had a number of credit accounts for a few years. She is looking for ways to improve her creditworthiness because she wants to buy her first home.

She need implement some changes into her financial behaviour, so that her credit score reflects this. Her credit report should detail how she pays on time and in full. It should also show that she doesn’t have too much debt to her name. For a favourable rating, she should find ways of bettering her score.

Paying everything back on time

By paying all of her creditors back on time, she puts herself in a much better position.  This is an easy way to improve your creditworthiness. She should make an effort of avoiding spending so much that she exceeds her credit limits.

Pay in excess of the required monthly balance

Rebecca should make concerted efforts to pay more than what is required.

Avoid applying for loans simultaneously

Even though she is looking for ways to improve, she should be wary of applying for too many loans at the same time.

Rid yourself of accounts no longer needed

Having fewer well-maintained accounts is better than multiple ones which you don’t need. By closing accounts she doesn’t need, technically, she’ll have less debt to her name.

Review credit scores

Credit bureaus do make mistakes too, so Rebecca should check her credit score regularly for accuracy. Eliminating any errors means that you can maximise on it.

Keep in mind that there are ways to improve your creditworthiness. With a clear and effective plan, this is something that can be achieved quickly too. Rebecca can do this and qualify for the home loan, making it easier for her to get the home of her dreams.

A Millennial’s Guide to Managing Your Finances

Save on a budget

How to Plan Your Finances

Financial planning has always been a tough cookie to crack, not just by the present generations but also by those who came before them. However, millennial’s in particular are at more of disadvantage, having to contend with student loans as well as a higher cost of living.

Most millennials also have no idea how to save and manage their money properly, leaving them vulnerable to further hardships down the road. Here’s a handy guide on the best way to handle your finances according to advice from leading financial experts.

Avoid Falling into Bad Debt

Student loans are quite unavoidable for the modern millennial, affecting your purchasing power when it comes to taking vacations or buying your future home. Hence why it’s so important to deal with them straight off the bat to avoid spending the rest of your life paying them off. Additionally, some people also manage to accumulate other forms of debt such as credit card payments or car loans, which further add to their financial burden.

Get Clued Up on Your Taxes

Most people don’t really understand the way taxes work but getting a basic understanding of how much you’re supposed to be paying may help you save money in the long term and avoid paying more than you’re actually meant to.

Remember that all income needs to be declared on tax forms, even that obtained from part-time jobs.

Draw Up a Retirement Plan

Retirement planning should be taken seriously, especially by millennial’s. The way things are looking, you’ll be receiving lower social security payments than your parents as well as become eligible for pensions at a later age. This is why it’s essential to set aside an amount of money each month that should contribute towards your retirement plan.

Plan a Budget and Stick to It

A mistake many millennial’s make is their failure to stick to any kind of budget whatsoever. Moreover, most enjoy living in the present and collecting experiences rather than investments, which is fine, but it may also hinder their ability to save for the a rainy day. That $5 dollar mocha soy latte every morning could be as Instagrammable as ever but it could also be making you broke, along with $15 avocado toasts and your last ‘backpacking’ trip around Europe.

Eliminating wasteful spending and reducing expenses such as eating out regularly are tried and tested ways to stick to your budget. Cutting down on going out and enjoying low budget activities such as house dinner parties with friends or engaging in online gaming are other smart ways to save your pennies while still enjoying the simple pleasures life has to offer.

Don’t be Too Big a Risk Taker

While it’s true that a lucky few managed to make their fortune by taking huge risks that paid off, these cases are more the exception than the rule. In fact, most millionaires and billionaires have amassed their wealth by being cautious and taking well thought out decisions when it came to their finances. Smart investments such as property for example is a safe bet if you’ve got some extra cash saved up but anything else (fluctuating stocks) isn’t worth the big financial risk.

Make Use of Technology

There’s an app for literally everything under the sun nowadays and fortunately for millenials that includes money management. Apps like “ Clarity Money ”, “Digit” and “Stash” are all apps which analyse your spending patterns and recommend ways in which you can save more money each

How Much Do You Need To Retire?

How much do you need to retire?

Most South Africans who retire from work are facing problems as they don’t have enough money to use after retirement. It is ideal for any worker to have a savings account where he/she can put his savings which they will use when they retire. This has enabled some companies to conduct workshops that are designed to assist such people. Some banks have gone as far as opening accounts that are tailor made for such people.

At an investor road show, Richard Carter, head of product development at Allan Gray, provided some figures to illustrate how much one should already have saved for retirement, based on your current age.

Carter worked on the assumption that to retire with 75% of your current salary in retirement, you need to have saved 17 times your salary by the age of 65. To be on track to reach that figure, after ten years of working, say around age 35, you should have saved twice your total annual salary. After 20 years of working, around the age of 45, you need to have five times your annual salary put away for retirement. For example, if by the age of 45 you are earning R400 000 a year, you should have R2 million in your retirement fund.

Important numbers to keep in mind

For those of you who have just recently started working, these are important numbers to keep in mind. The only way you are going to meet your required retirement target is to invest at least 15% of your income towards retirement and to never cash it in when changing jobs.

In fact, the main reason most 30-plus individuals find themselves under-funded for retirement is that they cashed in their retirement funds in their early 30s. Carter illustrated that over a 40-year working life, if you start your retirement savings ten years later, at the age of 35, your final lump sum in retirement will be half that of someone who started saving from the age of 25. That is not just because you had ten extra years of contributions, but because those ten years have had a longer time to benefit from compound growth.

But what about those who cashed in their retirement funds when they shouldn’t have? All is not lost, if you follow these tips:

  • Start using salary increases to boost your retirement provision rather than your lifestyle. You can invest up to 27.5% of your salary tax-free.
  • Adjust your lifestyle so that your living expenses are more manageable in retirement. If you only need to live off 50% of your current salary, then you could survive on a lower retirement lump sum. Keep in mind when doing these calculations that you need to double your current medical costs, as these rise significantly as we age.
  • Think about ways to extend your working life. If you can earn an income until the age of 70, even if it is just enough to supplement your retirement income, you can make your retirement funds last longer.
  • Ensure you invest in growth assets that deliver returns above inflation.

Unnecessary Spending – Millennial Behaviour

Unnecessary spending -millennial behaviour

As the behaviour of the South African economy is diving, South Africans are fast increasing their annual spending behaviour and below are some unnecessary spending behaviours.

  1. Convenient snacks and drinks: Try to adjust on your spending behaviour when it comes to spending money on snacks and drinks as they finish off your money. Foods and drinks at events and nearby shops are very tempting, you end up spending more money in a week.
  2. Beauty products: It’s best to spend money on health products that maintain your beauty than buying mysterious chemicals with an inexplicably high price tag. Some of these fragments are harmful to your body, it’s better to buy soaps and personal hygiene products first and avoid cosmetics altogether.
  3. New clothes: Buying clothes for cash is the worst thing to do. It’s better to do a lay bye or buy cheap second hand clothes at charity thrift shops and other used clothing stores.
  4. Staying in overpriced hotels: Nowadays no one needs to stay in expensive hotels. If you have travelled to a place far from home, it’s best to stay at a friend’s or relatives’ place. If you don’t know anyone in that are, do a quick research about cheap, safe and affordable lodges before you travel. Doing that will save your money in a big way.
  5. Entertainment: Buying books, going to the cinema, watching football at a stadium can negatively impact on your financial life. To easy yourself out from this is by going at a local library to read books, watch soccer from your TV at home and borrow movies from your friend to avoid the hussle of going to the cinemas.
  6. Apps: Some unnecessary apps on your phone chews away your bandwidth/bundles. Only leave apps that are useful to you. Most importantly you should turn off your data bundles if you are not using them. Failure to do that keeps you on a data spending spree.

 

Does Money Make Money?

Does money make money? The benefit of having cash backing in business

Have you often wondered whether you can make money using money? It’s possible as you can use your money to invest in other things hence the term investment. The finance industry in South Africa is highly characterised with big financial institutions such as banks and non-bank credit providers.

These institutions have large sums of money which they use to lend consumers. For example banks give loans, bonds to many people and they make profit by getting interests from these consumers. Despite the form of credit that is wanted, whether a debt or a personal loan, the only choice is to go to banks or some micro finance companies that borrow you money and get an interest in return.

Banks combine small lots of savings from many people at comparatively little interest rates and channel them to loans at more expensive interest rates. So in general banks and other financial firms earn better in return than what they would have if they had not given loans. Borrowers also benefit through paying lower interest rates on their loans.

Other aspects where you can use your money to make money is via a savings account which offers you an interest rate around 0.01%. You can also store your money in retirement accounts that would allow you to access your money when you retire as a work.

Another point is to open investment accounts or buy houses that would help you generate a lot of money when people pay rentals to you on a monthly basis.

The Creation Of Money – This Is How It’s Done

The creation of money – this is how it’s done

Money creation is the process where the economic activities of a country increases there by increasing the circulation and supply of money in the country. In many countries, money creation or money increase is seen through cash deposits.

Below are some of the ways used in the creation of money:

  • Injecting reserves: This is where large sums of money are deposited into the reserves of the banking system, in this case the Reserve Bank. The role of the reserve bank in this case would be to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa. It also plays a pivotal role in ensuring financial stability.
  • The credit market funnel: All the money belongs to the bank and chiefly the Reserve Bank. Banks lend money to people through loans, house bonds and other different investments criteria. It is through such transactions that banks make interests from its clients thereby making money.
  • Money creation mechanism: The logic is that most reserves banks are no longer physically printing money but rather working with figures thereby becoming more technologically creative. Nowadays most companies are using checks, debit and credit cards, balance transfers and online transactions.
  • When a bank makes a loan, it concurrently generates a corresponding deposit in the debtor’s bank account, thereby creating new money. Commercial banks generate money through bank deposits by making new loans. When a bank makes a loan for someone taking out a debt to buy a house, it does not give that person physical money but rather credits their bank account with a bank deposit of the size of the mortgage.

Best Ways To Spend Your Money After 50

Best ways to spend your money after 50

When you are 50 and you haven’t saved towards your retirement, then you should be worried because you have nothing that can sustain you. Spending money at 50 depends if you had started saving at 30, the time frame at which you began saving will define your spending culture.

Below are some of the ways someone with 50 years can spend their money:

  1. Save more: You are probably left with 10 or 15 years to reach your retirement age. What it means is that you should begin saving more money to catch up with all the years you were not saving. You can do that opening more investment accounts and open stress free business(s) that can sustain you during your retirement period.
  2. Protect your income: Avoid spending your income on small things that don’t add value to your life. Its time you should focus on remanding all the money you lost, your income should be directed towards items that multiply your income.
  3. Rent out your other rooms: If you have extra rooms in your house that are empty, you should rent them out to add more income on your expenses. It’s pointless owning a house whose rooms are empty and is taking away money from your pocket. You can also use the money you get from rentals to pay the house rates, a house should be set up in such a position that it can sustain itself.
  4. Look around for a cheap cellphone service provider: You should do a small research to see which network is cheap and has the best services. Don’t go for a network company whose bills will give you a headache at the end of the month.

4 Items You Should Not Spend Your Money On

4 items you should not spend your money on

It’s common for people to feel guilty when they spend money on items that don’t add much value to their lives. We have things that if we buy we feel bad and regret that we should have kept the money and used it for other better things.

Here are some of the things/items you should not spend your money on:

  • Extended warranties on electronics and appliances: sales persons in electronic shops have a tendency of luring customers into paying more by extending their warranty on electrical appliances. The truth chances are very low for a new electrical appliance to fail so the best is to ignore such extended warranties.
  • Bottled water: If your local municipality is known for providing the bets services i.e. water included, what’s the point of buying bottled water which is expensive? Bottled water is not necessary, get your empty bottles, fill them with water and put them in a fridge. Problem solved, water tastes the same.
  • Movies and clubs: Movies and clubbing have turned out to be some of the most expensive areas that can drain your pockets. When you get to the movies or clubs, you will spend money for entrance and buying drinks snacks for yourself and maybe a friend. You can do without with some kind of entertainments by watching movies at home with friends.
  • Fast foods: Fast foods are expensive. The ideal thing to do is to prepare your food and carry it to work. Or buy uncooked food from the stores and prepare it at home. Fast foods are also not good for your health.
  • Full price new clothes: It’s advisable to do lay byes than buying expensive clothes on cash. Take your time to pay clothes, doing that will help your spending behaviour and give you a clean credit record.

5 Ways To Manage Company Debt – An SME Guide

5 ways to manage company debt – an SME guide

Most companies fail simply because of poor management of their businesses. Some of the chief reasons most companies have failed and end up in big debts include: poor credit management, absence of money and using of business funds for personal use.

All this can be avoided if a company employs some of the following measures in its business:

Payroll

Companies or businesses that don’t pay their workers in time are charged or penalised for such a behaviour. The best solution to avoid such a scenario is to discuss the salary date with your workers. If an agreement is reached, you change their contracts to a date that best suits your business.

Suppliers and business partners

Loyalty and professionalism are two important aspects that are highly considered by many businesses. Maintaining these two will help keep your business’ reputation on the top hence suppliers and business partners will stick around your business for a longer time.

Aged payables

Avoiding or dodging bills payment can negatively impact on your credit score. Not paying will also create affect the reputation of your business and also reduce the chances of you getting credit in the event that you apply for one in future.

You should also avoid paying your rentals lately and avoiding to do that you don’t mount more bills on the already existing ones. Outgoing costs such as rent and utility bills need to be paid to keep the lights on! And again, not paying these could affect your credit rating.

Secured debts

If you are conducting a business as a sole proprietor, you will be held personally accountable for debts, and creditors could try to take your assets. This is one good reason to form a corporation or limited liability company.

Insurance

You should avoid having Credit cards as they bring high interest rates and mount on your debts. You should also avoid penalties or interest charges as these can pile up quickly.

New Phones in South Africa in 2018 – Cellphones Galore

Hauwaei cell

Smartphone technology and dynamic software have transformed the ways in which people communicate. With every new device introduced consumers have access to a wide array of options in terms of communicating and embracing new technology.

New phones in South Africa in 2018 offer impressive high-end performance, reliability and exciting new features.

Although South Africa has experienced a palpable decline in sales, new smartphones have entered the fray. In the South African market, price is an important factor, with devices within the R2000 region dominating sales.

New Nokia Smartphones

HMD Global announced models to be made available in South Africa, such as the Nokia 6, Nokia Sirocco and the Nokia 7 Plus.

The latest models are setting new standards and benchmarks in terms of design. They have also successfully maintained, if not improved the reliability Nokia has been renowned for. The devices are also still durable.

One of the main benefits is that battery life is quite stable, mainly owing to the fact that there are no hidden processes.

The device has a curved glass finish, and it has a stainless-steel frame. It also features ZEISS optics and also comes with pre-installed Google Services apps. The phone is expected to be available for R12999 on prepaid.

The Nokia 8 Sirocco is one of the new phones in South Africa in 2018 that is set to remind cell phone users of what made Nokia so popular in the first place.

Huawei P20 Series

Chinese company Huawei launched the P20 Series in South Africa with the aim to increase market share in the South African smartphone market.

With a rounded body, the P20 has a 5.8 inch screen and 128GB of on-board memory. Featuring 4GB of RAM, it delivers high-end performance and has no external memory card slot. As a premium phone, it also comes with a fingerprint reader on the front of the device. Huawei decided against a removable battery, while the device features a good camera, which takes impressive low light images.

New phones in South Africa in 2018 are set to offer consumers a range of new features and innovative technology.

Latest Posts

Improve Your Credit Score

5 Easy Ways to Improve Your Creditworthiness

Rebecca is a young professional who has had a number of credit accounts for a few years. She is looking for ways to improve...

Does Money Make Money?

FINANCE NEWS

The Creation Of Money – This Is How It’s Done

The creation of money - this is how it's done Money creation is the process where the economic activities of a country increases there by...

Best Ways To Spend Your Money After 50

Best ways to spend your money after 50 When you are 50 and you haven’t saved towards your retirement, then you should be worried because...