Don't let financial stress get the better of you

Friday, June 30, 2023

Battling to make ends meet, families are forced to stretch every cent amid constant interest rate hikes and skyrocketing food prices, while many consumers are deep in debt.  

Financial stress has become a reality for many households in South Africa.

The recently published annual Sanlam Benchmark report found 63% of South Africans were anxious about their finances, with 87% indicating they felt financial stress, while 58% said it was affecting their physical and/or mental well-being.

The same report revealed that 46% of the over 500 full-time employed respondents interviewed admitted to struggling to meet basic monthly needs like food and rent.

Meanwhile, the latest Credit Bureau Monitor Report (CBM) and the Credit Market Monitor Report (CCMR) found that of the 26.9 million credit active consumers, 9.71 million are battling to meet their financial obligations.

National Credit Regulator (NCR) Senior Education and Communication Officer, Jimmy Golele, said financial stress remains one of the top drivers of anxiety.

“Debt can be both a financial and mental burden, often with dire consequences,” he said.

Golele told SAnews that some effects of financial stress include poor performance and productivity, a decline in mental health, increased absenteeism at work and higher healthcare costs.

Meanwhile, there are a few signs that people can look out for if they suspect they are under financial stress.

These, according to Golele, include constant arguments and conflicts with people closest to you, becomming easily irritable, insomnia and sleeping difficulties, loss of appetite, social withdrawal, lower sex drive, tiredness and muscle pains.

“Acknowledging the circumstances and tackling your money or financial problems head-on can help one deal with their financial quagmire.”

According to Golele, this requires a mindset shift, which can help people to be more in control of their finances.

“Feeling less stressed about your finances will help you see an improvement in your financial confidence, which will, in turn, improve your mental and physical well-being.”

He warned against common unhealthy coping mechanisms that people adopt when they undergo economic hardships such as cancelling insurance products, abusing substances such as drugs and alcohol, gambling, chasing quick-rich schemes, self-harm or suicide.

“Sadly, unhealthy coping mechanisms are more likely to worsen the situation. For example, if one faces a medical emergency or gets into a horrible car accident after cancelling insurance, they may be forced to end up taking loans, sometimes from unregistered credit providers who may charge them exorbitant interest rates,” he explained.

The Saving South Africa Institute (SASI) Acting CEO, Gerald Mwandiambia, advised people who are financially stressed to consult a financial advisor to give an objective opinion to resolve the situation. 

“The last thing you want to do if you’re under financial stress is to try to solve the problem on your own and be prepared to hear what you don’t like to hear because sometimes the actions you need to take aren’t comfortable,” Mwandiambia said.

According to NCR, there are several steps that individuals who are financially stressed can take to remedy the situation:

  • Draw up a realistic budget. Drawing up a budget helps you to know exactly where your money goes instead of just wondering what happened to it.
  • Cut back on unnecessary expenses. When drawing your budget, you establish that there are areas that you may cut back. Many consumers spend lots of money on streaming services and expensive packages for pay TV, which they hardly ever watch. Look at how much you spend on dining out, entertainment and gym contracts.
  • Ask for help. This does not mean asking for further loans. Open up and talk to someone you can trust, especially if they are money-savvy. 
  • Talk to your credit providers. The lender may be willing to offer possible short-term solutions, which may include restructuring your debt, a payment holiday or even recommending a debt counsellor.
  • Consult with an expert. A financial advisor may assist with setting smart financial goals, saving money, investments and dealing with debts.
  • Debt counsellors. Where possible they may also negotiate with credit providers to lower the interest rate charged. Always ensure that a debt counsellor is registered with the NCR, as there are many scammers.
  • Find lawful ways to make extra cash. Earning an extra income may come in handy. One can ask their current employer to work extra hours, ask for a raise or even get a side hustle that does not interfere with the primary job as this may cause problems with your employer. Sell stuff you no longer need or use and monetise your skills and hobbies. –