Five steps to help women manage debt

South African women carry the weight of the world on their shoulders, and I stand in awe of the strength women continuously show when faced with adversity and discrimination.

Speaking to women about their finances, I would like to advise women to focus on what is possible and manageable in their finances.

Energy spent ignoring your finances (because all seems lost) does not serve you.

By gradually implementing a proper debt management plan, you will empower yourself with insight into your finances, and know how to “navigate” your financial choices so that they serve you.

Here are DebtSafe’s five recommended fiscal steps women can use to financially empower themselves – making sure they manage their debt effectively:

Step 1: Financial situation overview

Women need to kick-start their debt management plan by gaining insight into their overall financial situation (whether it looks good or bad). They can take previous months’ bank statements, inspect them (empowering them to see where the problem areas are), and decide what future position they want to see themselves in.

 

Step 2: Debt-to-income calculation

Women can determine their debt-to-income scale by adding all their debt dividing it by their income amount before deductions (gross income), times 100, and calculating it to a percentage. If the debt ratio is above 60%, it is a warning sign that they are over-
indebted and they therefore need to work on fixing their debt proactively.

 

Step 3: Rank debts as ‘good’ or ‘bad’ debt

Ranking their debts will enable them to see which debts to clear. For example, a home loan/bond (that has long-term value) can be seen as a “good debt” v a “bad debt” like an expensive, high-interest credit card (it doesn’t improve financial wellbeing), which will have to be dealt with soonest.

 

Step 4: Budget set-up 101


Setting up a budget that works for their needs is vital. Women can use phone apps, spreadsheets, online templates, or go old-school by adding their budget outline on a piece of paper and pinning it to the fridge.

 

Step 5: Budget implementation to properly manage debt

As soon as women have set up a budget, they can change it accordingly, and use it to make financial choices that will serve them – like starting a savings plan or paying off their debts in the most effective manner.

Women must consider using the above five-step debt management plan progressively. They will empower themselves to fix debt sustainably and get it out of the way, enabling them to take care of their financial needs.

Their fiscal achievements will not only affect their personal lives, but will also create a ripple effect, impacting the country’s economic environment and “rubbing off’ on their family members, household and friends in the process.

 

  • Oberholzer is debt adviser at DebtSafe

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