You don’t have to deny yourself all the things you love and want. You just have to be smart about what, how and when you buy:
1. Build up a credit record. Open a store account or a credit card with a low credit limit. If you have no credit record at all, financial institutions can’t tell what kind of risk you are. As a result they will charge more until they have a better sense of your credit behaviour.
2. Go window-shopping instead of real shopping. Seriously! Research shows that most of the pleasure in shopping lies in anticipation and not the actual purchase.
3. Focus on buying items that will add real value to your life, and pay off the amount owing on your credit cards in full every month. Also try not to use your budget facility unless you really have to.
4. Look for bargains. Again, focus on what will add value to your life. For instance, one or two classic, quality items that you will wear for years are a better bet than lots of cheaper, disposable fashion items.
5. Pay your rent on time and in full.
6. Don’t damage your landlord’s property. If an accident does happen, fix the damage, otherwise it will reflect on credit bureaus’ databases.
7. Build up enough savings to cover your living expenses for six months in case you lose your job.
8. Invest in a savings product like a retirement annuity. This enforced saving will prevent you from spending the money on other things.
9. Save up and pay cash for non-essentials like holidays.
10. Pay off big purchases like a car over a shorter rather than a longer period. The longer you take to pay something off, the more it will cost you in the long run.
To find out how credit fit you are, take the quiz at Getcreditfit.co.za. The Get Credit Fit initiative aims to educate and empower South Africans on how to take charge of their credit behaviour.