Financial crisis and your money

By Staff Writer
What does the financial crisis mean to you?

Trouble on the global financial markets has been over-shadowed in South Africa by political turmoil, which itself triggered panic on local markets when Trevor Manuel ‘resigned'. But as the US reels from the rejection of a $7 billion banking bail-out plan, stock markets worldwide drop in value and a number of major economies teeter on the edge of recession, what does this all mean for the average SA consumer?

www.justmoney.co.za, South Africa's online guide to money, says that even the average ‘man-in-the-street' should be aware that the problems on Wall Street and our own Johannesburg Stock Exchange could impact on his pocket.

Paul Beadle, managing director of www.justmoney.co.za, explains: "The problems on the global stock markets may seem complex, but the bottom line is that there is less money going around. This affects businesses that are now struggling because their stock value has fallen or because they cannot find the additional investment they need to grow. It also means that many banks are unwilling to lend cash because of the greater risks now involved.

"South African banks are actually in a good shape because they had limited exposure to the credit problems in the US that caused this crisis. But investors on the global markets are now very wary of risk, so they are going to be cautious of investing in emerging markets like SA. This lack of inward investment, which could impact on the growth and profits of the companies we work for, plus our own ongoing economic concerns and high cost-of-living, will put further pressure on our pockets."

www.justmoney.co.za says there are some key areas where South Africans need to be cautious and to continue actively managing their own finances:

  • Cut your borrowing - Interest rates are unlikely to fall soon so debt remains expensive. An average R10,000 a monthly balance on a 25% credit card will cost R208 in interest, equal to R2,500 a year, whilst the same amount on a 35% store card is R291 a month, R3,500 a year. Slashing your borrowing will put more in your pocket, whilst rolling your debts into your mortgage could trim your repayments - click here to find out about debt consolidation, or check out the debt management section here
  • Be careful with your investments - If you're thinking of investing in the stock market you need a steady nerve and advice from an independent adviser. You might be better off putting your money in a bank savings account such as the Nedbank Park It, which pays 11.5% interest on a deposit of at least R10,000 - click here to find out more about our savings best buys
  • Budget better - Buying lunch every work day could easily set you back R30 a time, so bringing your own food could save R150 a week, or more than R7,000 a year. R7,000 in a savings account, or extra payments in your mortgage, is much better for your financial health - use our budget planner to help you plan
  • Shop-around for a lower mortgage - A 20 year R1 million mortgage at an interest rate of 15.5% will cost you R13,539 a month. But negotiating it down to 15% will cost you R13,168 - that's a saving of R371 a month that equals almost R90,000 over 20 years. Get home loan advice by clicking here

www.justmoney.co.za has been created to help South African's save money by demystifying financial services and helping them to make informed decisions about their money. Users can get information about products, but they can also contact independent advisers for help with issues such as getting a home loan, managing their debts or taking out life insurance.

Completely independent and unbiased, www.justmoney.co.za also features a host of comparisons, tools and guides, enabling people to search and apply for new products, all online and completely free of charge.

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