Why you should avoid financial stress in 2016
Almost half of all credit active consumers are over-indebted.
JOHANNESBURG - January is in full swing, the rand is in a slump and inflation rates are on the increase, which means more people are at risk of getting into unwanted debt.
Earlier this week, debt management company Debt Rescue warned that almost half of all credit active consumers are over-indebted.
The company says it's seen a significant increase in the number of youth who have been lured by the multitude of loans made available by financial institutions and retail outlets, without fully understanding the implications of entering into a credit agreement.
Chief Executive Officer Neil Roets says, "We see, on a regular basis, that people are just not financially educated and they don't know how to work with money and especially with loans. It's so easy to get a loan once you get an income, but to actually maintain that and to ensure that you really needed that loan and you not just taking it out because you can do it. People just don't know that."
Roets said the rate at which people are getting themselves into financial trouble was more than doubling every year.
Financial educator Simon Brown has suggested ways consumers can cut costs without compromising their financial stability.
He says you may want to secure a tax free savings account.
"In the next seven weeks, if you've got some cash… put it into a tax free savings account. It needs to be money that you don't need for ten years. This really is your long term money. As best you can, boost that tax free savings account."
Listen: How to work well with your money in 2016