It’s well into February, and your bill and bank statements can no longer be ignored. But if you broke the budget over the December holidays, don’t panic: there are some simple steps you can take to start improving your finances and restore your credit score to better health.
It’s important to realise, you’re also not alone. TransUnion’s Q2 2021 Zambia Market Analytics Report showed that the combined effects of COVID-19 and the ongoing recession have had significant implications for consumers. Many jobs have been lost, and the savings of households have come under severe pressure, which means it will take some time to recover from the impact of the pandemic.
We asked Mildred Stephenson, Chief Executive Officer at TransUnion Zambia, for her top five tips to get 2022 onto a solid financial footing.
Budget, budget, budget
The only way to get on top of your finances and avoid overspending is to create an effective budget. It doesn’t have to be complicated: list your monthly income and your monthly expenses. Once you’ve allocated the fixed expenses, like your home loan, school fees and credit card payments, you can set realistic budgets for groceries, eating out, and entertainment, says Stephenson.
Save something for a rainy day
Try to put aside a portion of your salary to pay for any unexpected financial crises, such as health emergencies or a major repair on your car or a household appliance. That way, you’ll avoid having to access expensive credit to deal with unexpected expenses. “It’s tough to save right now. But start small: even 5% of your monthly income can help you build up a nest egg that adds up over time. If you pay yourself first, it’s also easier,” says Stephenson.
Pay down your debts
Prioritise your debts and if you can afford to over pay do it in the most expensive debts first. If you can, pay more than the minimum balance owing each month, or you’ll end up paying more interest than you have to. If you’re going to battle to make all your payments, it’s vital that you speak to your lenders and restructure your loan repayments. Once you default on a payment, it affects your credit score negatively, and will hurt your chances of getting credit in the future.
Get your latest credit report
Your credit report lists your credit accounts, including credit cards, home, car and student loans. Mistakes can be made. Consumers who regularly check their credit report are in a better position to make sure their report accurately reflects their credit history and behaviour. If any mistakes are found or information you don’t agree with, you can immediately take the matter up with the credit bureau. This is what is known as lodging or submitting a dispute. Contact TransUnion (Credit Reference Bureau Africa Limited) on 095 5985307, 095 5985107 or on landline 0211 224263, 0211 220530/36 and 0211 420500 to obtain your free credit report. To help prevent fraud or spot any accounts that shouldn’t be here, which might affect your credit score. Once you know your score, you can start taking steps to improve it, says Stephenson.
Change your spending habits
It’s vital to manage your exposure to credit carefully. Make sure you pay off your full balance owing on your credit card every month. And if you want that fancy new big-screen TV, save up for it. “If you’re financially stressed right now, you want to start planning how to avoid feeling the same next year. Your stress levels will thank you in 12 months’ time!” says Stephenson.