Understand what you are getting intoaccount

How often as an individual do you get the famous call from your bank about changing the type of account you have or upgrading it? When the bank does call, the person on the line is trying to convince you to change because you have been pre-approved or you now qualify. It can at times sound very flattering.

Most people are concerned about the benefits of changing their accounts rather than what they are actually paying for it. Different benefits, different colour cards mean different costs and these costs can at times be very high. So what are the most common accounts and how exactly do they work:

  • Savings Account: The most basic of all bank accounts, created to encourage saving. These account has lower monthly fees and allow for limited transactions. Transactions should be kept to a minimum as most transactions will be charged for. For instance some savings accounts don’t allow you to pay for purchases at a till point. Most if not all require a minimum amount to be kept in the account
  • Cheque/Current Account: These accounts generally have higher monthly fees. One can do electronic transactions, internet and cell phone banking and some even have free cash withdrawals and deposits. Most current accounts have an overdraft facility which is credit. These type of accounts often have a rewards programme/system
  • Credit card accounts: A credit card allows you to borrow money or pay for items and services on credit. You then settle the amount at a later stage with interest, which can at times be very high. Credit cards allow you to shop and make purchases online.
  • Transactional Account: Transactional accounts are nothing other than either a cheque/current or savings account where you will have an admin fee and then pay per transaction i.e. every time you swipe you pay a certain amount.

credit cards inside small5There are silver, gold, platinum and black cards available and what account/colour card a person qualifies for depends on their salary. The higher your salary the better the colour - this may differ from bank to bank. Banking is a personal activity and you as a person need to make sure you know your bank charges, benefits and the limits on your specific account. Do not concern yourself with the colour of your card but rather make sure that your account serves your needs for the lowest fee. Paying exorbitant fees just for a certain colour card that doesn’t serve your needs is a waste of money. Bank charges are an expense and just like with spending one needs to be smart enough as not to pay more than one needs to.

Lesetja Madiba
Financial Wellness Consultant at Consolidated Financial Wellness

*** Consolidated is a national financial planning and financial wellness practice with offices in Western Cape, Johannesburg, Tshwane, Eastern Cape and KwaZulu-Natal. For more information visit www.consolidated.co.za

A5 Quote2Don't get Caught this Christmas!

Christmas decorations have started coming up, summer is in full swing and most of us can almost taste our holiday.

It’s that time of year where most of us are looking forward to the well-deserved Christmas break.

Some people will get a bonus at work and most employed people will get their salaries for December much earlier than usual, somewhere about halfway through the month. Most individuals' bank accounts will contain more than usual amounts of money, and the illusion of a never-drying well is created.

Christmas Savings 149x225There are a few things one has to consider and watch out this festive season and avoid the money traps:

  • Don’t spend money just because you have it, one doesn’t have to spend money to be joyful and happy this Christmas
  • Should you have to spend make sure your purchases are thought through and planned. Always consider tomorrow when spending
  • Avoid last minute shopping. Buying an item under pressure means you’ll pay more than you’re supposed to
  • The reality of bad financial decisions is that January will become debt month.
  • Pay cash for your Christmas turkey, avoid using the credit card at all cost. You don’t want to be paying for last Christmas’ lunch 6 months into the new year
  • If you have existing loans avoid “Payment Holidays”. Payment holiday only means more interest charges and longer payment terms

The biggest gift you can give yourself this festive season would be to have enough money left over in January to meet all your financial obligations. Carry December’s financial joy and happiness in general into January and avoid having to use credit. Spend wisely and prudently in order to enjoy your festive season but also to make sure that you are financially well in January.

Lesetja Madiba
Financial Wellness Consultant at Consolidated Financial Wellness

Financial Intelligence - Are You fully aware of the scope of your Financial Affairs?

What is Financial IntelligenceIn the not so distant past there were no ATMs, no internet banking and no 24 hour online shopping. The older generation grew up in a time where circumstances forced them to use money wisely and budget often through trial and error. While times have changed, people today have information about any and everything at their fingertips. Knowledge is at our finger tips and for me knowledge is and power and that translates to money in my pocket. In September of 2003 the Association for Savings & Investment of South Africa reported that there were 1025 rand-dominated unit trust funds in South Africa. That was 12 years ago imagine the number now. What do you invest in?? Where do you start?? That is where financial intelligence comes in.
Financial intelligence is defined as “the gathering of information about the financial affairs in order to understand their nature and capabilities”. The definition suggests that one has to research and understand. This means a few things practically:

  • Am I making the best use of my money?
  • Does my lifestyle match my budget?
  • Is my debt under control?
  • What are my financial goals?
  • Who and what products can help me to get there?
  • When I am no longer alive will there be provisions for the family I leave behind?
  • Do I keep informed about current finances? I.e. Inflation and its effects

The more financially intelligent you are the wiser your choices will be in terms of managing your money and also how it is that you put away money for the future. Financial intelligence is not only required for our personal lives but at our places of employment. Yet for many people their financial intelligence stops when they leave the office. “Invest” in yourself and educate yourself on financial issues. That may just be your missing link to being financially well. After all if you know better you do better.

Lesetja Madiba
Financial Wellness Consultant at Consolidated Financial Wellness

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