"Few people realise the benefits to be gained by merely taking control of their finances. By knowing how much you owe, you are able to determine how much you can actually afford to spend once the bills have been paid. As simplistic as this might sound, this is the first step towards gaining control over your finances," says Georgina Ross, Product Manager of FNB`s One Account.
By managing your debt, you will know where your money is going. It will also help you figure out crucial details like whether your expenses are greater than your income or not? Or what portion of your income is dedicated to paying off expenses?
Another rule of thumb in managing debt is that the term of repayments on any purchase should not be longer than the length of time that you will receive value from it. So, if you take the family out to a local dinner once a month, by the time of your next outing, that bill should have been paid off.
Yet another tip for the financially embittered is to keep track of the interest rates charged on their various accounts. By knowing how much interest you are being charged on your various retail and credit cards, you will be able to focus on paying off the accounts that yield the highest interest first, with the low interest earners being paid off last.
"For some, this might be easier said than done. We realise that today, the average consumer has a lot of retail, credit card and property debt to consider. Therefore, taking charge of their finances might require a helping hand.
"This is why we introduced the One Account, which allows property owners to consolidate all their banking into one account that yields a lower interest rate. The solution we have introduced to the market is not entirely new. It was previously only available to the rich few," she says.
However, this has changed as the One Account is now available to a wider segment of the population. Not only does it allow you to establish the extent and cost of your debt at a single glance, you immediately receive the benefits of considerably lower, home loan-based interest rates.
"Because you know the extent of your debt on the account, you can use the debt manager tool to accelerate the payments on specific shorter term debts as you see fit. The result is considerably greater control over your financial health."
Every person has a right to financial wellness. Knowing about what is available out there and how to use the assets you work so hard for, to your advantage, is part of achieving the fiscal well being we all deserve.
FNB is a division of FirstRand Bank Limited and an authorised financial services provider.
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