Living within the limits of a Sassa grant often means tough financial choices.
Pressures from family, unexpected expenses, and the lure of “get-rich-quick” schemes can derail even the best-laid plans.
Financial advisors understand these challenges and want to support grant recipients in making the most of their money.
Here are 7 common financial pitfalls that advisors wish recipients could avoid, along with practical solutions to help build greater financial stability.
1. Not budgeting due to limited income
You might feel a budget is pointless because there’s not much wiggle room with a fixed-income grant.
The Solution:
Track everything: Even small amounts add up. Track income (grant payments) and expenses for a month to understand your spending patterns. There are free budgeting apps or you can use a simple notebook.
Identify leaks: Are there areas where you can cut back? Small adjustments, like buying store brands or walking instead of taking taxis, can free up some money.
Plan for essentials: Prioritize basic needs like rent, food, and utilities in your budget. Allocate remaining funds carefully.
2. Lack of emergency savings due to immediate needs
Unexpected events can be devastating without a safety net. Medical bills or even minor appliance breakdowns can force you into debt.
The Solution:
Small starts: Saving even a small amount regularly is better than nothing. Aim for R20 or R50 a week and gradually increase as possible.
Saving mechanisms: Many grant recipients use stokvels (rotating savings schemes) for emergencies. Explore stokvels with reputable organizers or consider saving at a bank with a basic savings account (avoiding high fees).
3. Not prioritizing debt repayment due to overwhelming amounts
The Problem: High-interest debt on loans or funeral policies can quickly spiral out of control.
The Solution:
Talk to creditors: Be honest with lenders about your situation. Some may offer repayment plans with lower interest rates.
Debt consolidation: Explore consolidating multiple debts into a single loan with a lower interest rate. This simplifies repayments and saves money on interest. Be cautious of high upfront fees.
Seek free advice: There are free or low-cost debt counseling services available from some NGOs. They can help you develop a realistic repayment plan.
4. Not saving for retirement because the future feels distant
The Problem: Sassa grants are not meant to sustain you throughout retirement. Saving even a small amount now can make a big difference later.
The Solution:
Start small: Even R50 per month can add up significantly over 20 or 30 years due to compound interest.
Investigate options: There might be government-backed retirement savings schemes with low minimum contributions. Speak to your local Sassa office or a financial advisor for guidance.
5. Falling victim to scams that promise quick returns
The Problem: Fraudsters prey on vulnerable individuals, including grant recipients, with unrealistic promises of multiplying their money quickly.
The Solution:
Be skeptical: If something sounds too good to be true, it probably is. Don’t invest based on pressure or emotional appeals.
Do your research: Never invest in anything without thoroughly researching the company, product, and people involved. Check regulatory bodies for warnings.
Get advice: If unsure about an investment opportunity, talk to a trusted financial advisor or community leader before committing any money.
6. Not seeking professional financial guidance due to cost concerns
Financial decisions can be complex, and expert advice can save you money in the long run. However, financial advisors often charge fees.
The Solution:
Free resources: Look for free financial literacy workshops or resources offered by NGOs or government institutions.
Limited consultations: Some financial advisors offer one-time consultations for a set fee. This can be a good option to get initial guidance.
Community support: Speak to trusted community leaders or social workers who may know the financial resources available.
7. Making impulsive financial decisions based on emotions
Urgent needs or excitement about a purchase can lead to poor financial choices, like unnecessary borrowing or unplanned spending.
The Solution:
Take a step back: Don’t rush into financial decisions. Give yourself time to cool down and consider the long-term consequences.
Sleep on it: If you see something you really want, wait a day or two before buying it. This can help curb impulse purchases.
Prioritize needs over wants: Focus on necessities like shelter, food, transportation, and basic clothing before spending on non-essentials.