The best things in life are free, or so they say. Regrettably, in practical terms that is not the case and you would be forgiven for thinking that this adage is nonsense. It is why the phrase “the cost of living” has been coined. Nearly everything we need or want has a price.
The poverty trap here in South Africa is a substantial social and economic problem. Since 1991 another three million South Africans have been forced beneath the poverty line. It means that more than 55% of the population try to eke out an existence on less than R992 per person per month according to Quartz Africa.
For these unfortunate individuals, knowing how to stop spending money isn’t the problem. It’s simply that they don’t have enough cash in the first place to buy the necessities. But for people just above the poverty line, understanding what they can do to stop spending is essential. It can prevent them from joining the ranks of the poor and making the problem even worse.
The misuse of store and credit cards
The concern about rising indebtedness in South Africa is growing. In many instances, it can be put down to a lack of financial planning. One of the big problems is the willingness of consumers to use or misuse credit and store cards. The fact that these purchases get put on an account and are not paid for at the time of the transaction is the culprit.
It leads the buyers into a false sense of security because even though they haven’t had to pay in cash, they are usually responding to the urge to buy on impulse. It’s precisely the opposite of dwelling on the need or planning your personal finances.
In a recent study undertaken by the World Bank, it was found that 86% of consumers in South Africa had borrowed money in the past 12-months. That is quite a level of indebtedness, and much of it is down to the fact consumers get a feeling of instant gratification when they buy something new.
Lack of financial education proses a big problem
But the overriding cause of indebtedness has to do with the lack of financial literacy. If, for example, people were more financially savvy, they would know how to create a budget. They would understand the impact that the interest charged by credit and store cards works and what it means to the rand in their pockets.
Without this basic knowledge of how money works, they are far more exposed and vulnerable in terms of getting into debt. The marketing industry actually targets these financially unaware people, and they get easily led into buying things in the sales or on exclusive deals.
Keeping up with the Joneses is another fad that people get drawn into. They like to show off that they too have got what their neighbours have for no other reason than to impress.
Tips on how to stop spending
Learning how to stop spending to avoid getting into too much debt is not rocket science. There are many methods you can employ to curtail spending. Just take a quick peek at this guide to help you stop spending so much money.
When it comes down to the crunch, there are two key things to remember that can curb those impulse buying urges. The first thing and the most effective by far is to create a personal budget. If you know what you are prepared to spend and you stick to it, it will work better than anything.
But if you do get caught out by a sudden impulse to buy something, dwell on it overnight before taking action. This is the second tip to quell the urge to buy now. Nine times out of ten, weighing up the wisdom to buy something on the spur of the moment will expose it for what it is. A folly. Something you can easily do without.