“I want to encourage my fellow South Africans to make their finances count. While we may not be able to control external economic factors or financial disruptions, how we proactively prepare for and handle unexpected challenges can directly or indirectly impact our financial well-being and future generations' financial decisions and journeys.”

Reaching important financial goals (while dealing with life’s ups and downs) is not easy but it is possible. I would suggest one of two strategies to help build economic resilience: increase your income or reduce your current debt,” encourages Carla Oberholzer, communications specialist at CreditSmart Financial Services.

Strategies to Build Economic Resilience

Increasing Your Income

If you want to give increasing your monthly earnings a try, here are a few suggestions to stir up some creativity and add-ons to your income:

• Side-Hustle: Utilise skills others might find valuable, such as tutoring, freelance graphic design, dance lessons, or offering other services during your off-hours. Don’t forget to turn hobbies into income streams. Whether it’s selling artwork, crafts, or other handmade products, your passion can become a profitable venture.
• Overtime: If your job pays for the extra hours you put in, take advantage of the opportunity to earn more (without neglecting your family responsibilities, of course).
• Sell Unused Items: Identify items in your home that are in good condition, but you no longer need. Consider selling kitchen gadgets, furniture, garden tools, or exercise equipment. Selling these can provide a nice cash boost.
• Asking Rent: Do you have a spare room or extra parking spot at home? These income opportunities may be closer than you think.

Tackling Your Existing Debt

If increasing your income isn’t feasible, consider a strategic method to tackle your existing debt. Here are a few options that can fit your lifestyle and needs:

1. The Snowflake Method
   The snowflake method is like a snowstorm—each separate snowflake may seem insignificant, but together, they can create a powerful impact. By putting any small savings or extra money—no matter how minor—towards your debt, you can gradually chip away at what you owe. Over time, these small, consistent payments will add up, helping you to reduce your debt steadily.

   • Taking Action: Whenever you save money, such as skipping a coffee or finding a deal on groceries, immediately put the amount towards your ‘lower-my-debt fund’. Over time, these small contributions can make a big difference.

2. The Snowball Method
   If you thrive on ‘quick wins’, the snowball method might be your best bet. Start by listing your debts from smallest to largest. Focus on paying off the smallest debt first while making minimum payments on your other debts. Once the smallest debt is cleared, use the freed-up funds to tackle the next smallest debt, and so on. This method gives you momentum, creating a ‘snowball’ effect that grows as each debt is eliminated.

   • Taking Action: Begin by paying off your smallest debt, such as a store account. Once cleared, apply that same payment amount to your next smallest debt, building your momentum until all debts are gone.

3. The Avalanche Method
   If you are driven by minimising long-term costs and competitively tackling challenges, the avalanche method may be your ideal choice. Instead of focusing on the smallest debts, this strategy prioritises paying off debts with the highest interest rates first. By doing so, you minimise the total interest you pay over time, which can save you money in the long run. Once the highest-interest debt is paid off, you can move on to the next highest one, and continue this pattern until you are debt-free.

   • Taking Action: Identify your highest-interest debt, such as a credit card balance. Allocate as much money as possible to pay it down quickly, then move on to the next highest-interest debt. This approach can help you save on interest and pay off your debts faster.

Choose a Strategy that Resonates with You

“Choosing financial strategies that resonate most with you is key to staying motivated throughout any chapter of your financial journey. Whether you choose to increase your income and add money to your emergency fund, or instead, slash your debt to lower your total debt amount, the important part is to start and stay consistent in your habits and actions. Let’s make this time of year a turning point towards an inspiring financial future, not only for ourselves but also for those who look up to us,” encourages Oberholzer.

Total Words: 682