5 insurance hacks to be more money smart
Have you been smarter with your money this week? As the inaugural Money Smart Week South Africa (MSWSA) draws to a close (8-12 October), following a series of informative talks and workshops across Mamelodi, Tembisa, Alexandra and Soweto, now’s the optimal time to reflect on all money matters. Focused on consumer financial education (CFE), the event – which was championed by the National Treasury and coordinated by the Financial Sector Conduct Authority - brought together multiple stakeholders with a common cause: to up SA’s financial literacy in order to empower people to make better decisions.
Ray-ann Sedres, Head: Transformation at Santam, said Santam has made it a long-term commitment to provide financial education opportunities for communities who previously would be uninformed on financial pitfalls and opportunities. That’s why she believes a collaboration with MSWSA was a natural fit, “For us, our mission to be good and proper places great weight on empowering South Africans to make informed decisions that catalyse positive outcomes for their lives in the long-term. We’ve been doing this kind of work on-the-ground for the past six years so it was a natural extension of the programmes we already run to speak at Money Smart Week.”
Sedres said that through live talks and radio interviews, Santam chatted about personal finance and budgeting; motor, building and home contents insurance; as well as taxi insurance, in collaboration with one of its affiliated underwriting partners VUM. “We spoke to both individuals and small businesses. Our aim was to show people that there’s a lot you can do with a little and to change individuals’ relationships with money and how they view their assets. For example, if you’re a graphic designer, your laptop may be your livelihood, so it’s worth protecting.”
In line with what Santam spoke about, here Sedres outlines five ‘hacks’ that’ll help you to get smarter with money matters:
- You know what to do… We all know we should do it and yet few of us have the discipline to draw up and stick to a strict budget each month. Part of money management means realising that a budget will help you make the most of whatever you earn, however small the sum may seem. And budgeting isn’t just for people who earn salaries either; it’s just as important to plan if you’re a freelancer, ‘slasher’ or unemployed. Fidelity suggests a ‘50/15/5’ budgeting plan:
- 50% of your monthly money goes to essentials like your rent, childcare, groceries, medical aid, petrol, life and short-term insurance, and paying off debt.
- 15% should ideally go towards saving for your retirement.
- 5% should contribute to your emergency fund.
- And 30% could be your ‘fun’ fund – or maybe some of it’s for your tax-free savings or investments.
- Understand the difference: Lots of people tend to confuse life insurance and short-term insurance. With short-term insurance, you’re not insuring yourself against a predictable eventuality; you’re insuring yourself against unpredictable risks. You can’t know if you’ll be in a car accident tomorrow, if hail will destroy your roof or if your engagement ring will be stolen. So by insuring yourself, you ensure you can return to the financial state you were in, prior to an incident occurring. This is one of the best ways to protect your financial wellbeing against the curveballs life all too commonly throws at us all.
- Love your assets: Think about the things you own and the value they bring to your life. Some things – like your jewellery and rings – may have sentimental value. Others – like your laptop, tools or car – might be essential to your business or savvy side hustle. Consider whether you can afford to lose these assets – should a flood or fire destroy part of your house, for example – and that’ll help you determine whether it’s worth insuring them. It may be the case that you can afford to replace them if they’re stolen. But also consider the effect that’ll have on your finances in the short- and long-term.
- Accidents happen: If something happened to your car, could you afford to replace it? Some worrying statistics have been released recently: texting while driving makes young people between the ages of 18 to 24 twice as likely to be involved in a vehicle crash as people aged 25 to 49. Additionally SA’s road death toll for 2017 was one of the worst in years, with 14 050 fatalities. Suffice to say that no matter how safe a driver you may be, it’s still imperative you insure your vehicle against the risk of an accident to protect yourself from financial loss.
- Insurance is important for ‘good credit’: Credit can actually be a smart financial move providing you’re using it responsibly to invest in an asset like a house. Insurance plays a pivotal part in allowing you access to a home loan, for example.
Now that Money Smart Week is over, take time to get your financial house in order. .