While monetising your hobby or taking another job are high-potential ways to earn some extra income, it can take time to build up a nest egg.
The following everyday things can help you save now and in the longer term. Some may mean stumping up cash, but the investment will be worthwhile.
1. Maintain your home properly. Lack of maintenance is one of the main reasons that buildings insurance claims get rejected. Fix small maintenance problems at the first sight of deterioration to prevent a small problem from becoming larger and much costlier.
2. Invest in a health cash plan. It may not be wise to rely solely on your medical scheme, as this insurance doesn’t always cover all hospital bills. A health cash plan is particularly worth considering if you are self-employed, a temporary worker, artisan, vendor, or tradesman. People who are not permanently employed can find themselves facing huge medical bills and expenses in the unfortunate event that they are hospitalised for a couple of days.
Lee Bromfield, CEO of FNB Life, says, “Even if you do have medical aid, a health cash plan will come in handy to provide you with some sorely needed cash to help with any additional expenses incurred while you are in hospital.”
He cautions, however, that a health cash plan policy should not be confused with medical aid, but rather be used as complementary cover for bills that would normally not be covered by your provider.
“Since health cash plan benefits may be used for anything you want, someone who has lost two days of work and income, for example, can use the cash benefits to make up for the days lost,” Bromfield says.
3. Buy a legitimate funeral insurance policy. Funeral insurance scams are rife at the moment. You may have been approached by a “provider”, and it may sound like a good deal, but your try to claim, the provider may renege and you’ll have to foot the bill yourself.
Find out if the provider is registered. Whether a financial adviser or a funeral parlour, ask for material from the life insurance company that explains how the funeral policy works.
If you don’t recognise the company’s name, you can call the Financial Sector Conduct Authority (FSCA) on 0800 20 3722 to check that the company is registered.
4. Find out if you have unclaimed benefits. Have you moved or changed jobs and failed to inform your pension provider of your change in address? According to the FSCA, South Africans are owed about R45 billion in unclaimed benefits from retirement funds.
To find out if you have funds that are due to you, visit the FSCA website and fill out the unclaimed benefits form. It’s a free service and you should get a response within three days. You will reach your savings goals quicker if you obtain all the money that could be owed to you.
5. Know your credit score. Do you know what your credit score is? No? Finding out whether your credit rating is healthy could make all the difference when you are applying for a loan.
If you apply for a loan and your credit score is poor then you’ll likely get charged a higher interest rate, as you’ll be deemed a risk by the lender. Making sure you have a healthy credit score will ensure that you save more money in the long run, as you won’t pay as much for your debt.