What is a budget?
To make money, you need to manage your financial matters as if you were running a business. To understand how a business is run, you need to understand the following 4 concepts:

Income: The money you receive
Expenses: “Need to have” and “Nice to have” expenses
Profit - Your income exceeds your expenses
Loss - Your expenses exceed your income

Why prepare a budget

• It creates guidelines and limits when to decide on the “NEED TO HAVE” and “NICE TO HAVE” expenses.
• It helps with active saving, which is the most important ingredient in financial freedom

What is savings?

Saving is the portion of income you set aside for future spending. It is the storing of your profits in a safe place, where interest can be earned.

Why should we save?

• Saving ensures that we do not have to borrow to purchase items that you want
• Saving ensures that we can maintain our desired standard of living when we retire

Money Saving Tips

Save 10c from every R1 that you earn. If you put away at least 10 percent of your income as part of a long term savings plan, there is a good chance that you will have a financially secure future and be able to attain your financial goals Use the “Can I Sleep” judgement when making investments. An investment is too risky if you are going to lie awake at night worrying about it. Be extremely cautious if the returns promised on an investment exceeds what is generally available. If it sounds too good to be true, they probably are. Don’t be afraid to negotiate commissions / fees for financial advice. When you are advised to invest in something, do a bit of research of your own. Get a second opinion and use the internet Only invest when you have no debt. There are exceptions, such as paying into a retirement fund while you have a home loan Always have an emergency cash fund. Ideally the fund should be equal to 3 months income

Dangers of borrowing

A loan is not a substitute for income, as you still need to repay the entire amount received plus many other charges, including interest, administration fees and credit life insurance. Borrowing therefore makes the price of items purchased more expensive.

Your rights and obligations when borrowing

In terms of the new National Credit Act lenders have the following rights

• Consumers have the right to apply for credit
• Prohibition of discrimination
• A consumer has the right to receive credit documents in a language that he/ she can read and understand.
• The consumer can choose how he / she would prefer to receive the credit documents –mail, fax, email etc
• A credit provider may only implement legal proceedings once the borrower has been informed in writing that he /she/ is in arrears.
• A quote and pre agreement statement needs to be provided to all borrowers
• Finance charges and administrative charges are prescribed with set limits. Contact the National Credit Regulator with more details on 0860 627 627

Borrowing Tips

Beware of plastic. Store and credit cards may be convenient, but they are also an easy way of running up debt. Don’t fly now, pay later. It is very depressing to pay for a holiday that is now a distant memory Keep a good credit record Don’t ever sign a blank contract Find out all the finance charges before you sign anything. If you fall behind on repayments of debt contact the credit provider immediately

What is the blacklist?

We hear about a black list when people have not paid their credit agreements. Such a list does not actually exist. What is referred to is in fact the country’s credit bureaus. Credit Bureaus have millions of records listing different consumer behaviour. Most of this information is positive. However, if you have defaulted on credit payments this will be detailed on your profile. If you apply for credit again, the lender will have checked first with the credit bureaus and will take negative information into consideration.

What does it say on my credit profile?

The information recorded on your credit report will include personal information, information about your employer and previous employees as well as a list of all your creditors and your payment history with the various creditors. You will also find all default and judgements recorded against your name.

	Tips on what to do if you have a negative listing
	Pay the credit grantor the outstanding balance of what you owe Get a letter from the credit grantor that states that the balance has been paid and gives permission to the credit bureaus to remove the negative listing

If the credit grantor will not remove your negative credit information, you should obtain a letter stating that you have repaid this debt. If you apply for credit in future it may help you to mention that you have a negative credit profile but that this has been paid in full.

Credit bureaus contact details

There are 2 consumer credit bureaus in South Africa – ITC AND EXPERIAN.

Their contact numbers are:
ITC 0861 482 482
EXPERIAN – 0861 105 665

You can also visit www.mycredit.co.za to obtain a copy of your personal credit report.