They say “knowledge is power” and knowing what compromises your financial wellness is the first step in minimising your risk and limiting your stress.

According to a recent report by MMI holdings and UNISA, the South African economy is not the only thing heading toward junk status, but local consumers’ individual financial profiles are as well (in fact, some economists claim that it is exactly because of our culture of living financially frivolous that is pushing our economy down the slippery slope in the first place).

According to this latest MMI UNISA Consumer Financial Vulnerability Index (CFVI), there has been a noteworthy increase in local consumers who are “very exposed” financial; etching them all the more toward financial blacklisting.

Perhaps you’re wondering why consumers are stretching their money and jeapordising their financial wellness? Maybe you’re worried about being keeping your own finances afloat? Or you’re on the lookout for tips about how to avoid getting into the same boat as so many financially stressed and vulnerable consumers?

Whatever the reason for your interest, we’ve compiled a list of the CFVI’s top 10 perceived reasons for financial vulnerability below:

10) Not having sufficient savings to draw from

The truth is: having emergency savings in the bank can make a massive difference when the “you-know-what” hits the fan… Our article on why it’s important to have an emergency savings fund will give you greater insight into why you need to create such a fund as well as how much you should put in it.

9) A drop in income

Loss of disposable household income can really put strain on a family! As you’ll see from our blog post on whether there’s ever a bad time for income protection, that’s why it’s so helpful to make sure that everyone who contributes to the family’s finances have income protection – that way the family can weather the storm more easily.

8) Adverse economic conditions

When times are tough and all we see is rising costs, keeping ahead of your pay cheque can be even more taxing. Luckily, that’s exactly why MoneyShop’s around: to offer financially-savvy tips and advice while also giving you exclusive access to some of the best deals in town. Think of us as your pal from one pay cheque to the next…

7) Low income

Besides better money management, low income is perhaps the easiest of the top ten perceived reasons for financial vulnerability to combat… And while we understand the economic downturn has brought with it lower salary increases and little or no bonuses, we’re also seeing a huge surge in people harnessing technology to help them make extra cash on the side. In fact, the MoneyShop team wrote a whole series on making more moola in 2016, why an online store involves more than just technology to be successful and the do’s and don’ts of making more money in 2016.

6) Unforeseen expenses

Ah, the eternal financial dilemma! Just when you’re back on your feet and making ends meet something unforeseen happens. Typical! And since you didn’t get a gap to prepare that emergency fund we discussed above, having to fork out extra for an unforeseen expense, whether it’s money for your child’s school trip or the excess on your car insurance, can really bust up your budget.

One of the best things you can do for your financial wellness is prepare. Prepare by taking out travel insurance when you’re headed abroad, prepare by having a second credit card just in case your primary bank is experiencing downtime, prepare by making sure your medical aid covers dental expenses – you get the drill.

5) Rising interest rates

Did you know that we’re still in an interest rate hiking cycle? This means we expect to continue seeing incremental interest rate increases until at least 2017… Understanding what interest rates are and how they work is the first step in ensuring that they don’t impact your financial vulnerability.

4) Job loss

So, there’s income protection (like we discussed above under reason 9) and then there’s unemployment insurance or – as it’s best known – UIF. It is deducted from our salaries every month and is a real life saver in the event of job loss. Of course, to reap the full benefits, it’s essential that you understand how UIF works and what your rights are.

3) Spending more than what you earn

The only way to avoid spending more than what you earn is to keep tabs on what’s moving in and what’s moving out of your bank account. Knowing where your money goes and creating a spending plan will help you ensure that you cover the most important expenses first and, in so doing, limit the amount of unnecessary debt you take on – making you more financially stable, instead of vulnerable.

2) Too much debt

It’s the four letter word that so many of us dread… DEBT! But, even though your debt may seem insurmountable at times, we’re here to help you to not only understand debt but also get out of the debt trap. And if you’re in need of debt consolidation, that can be arranged through MoneyShop’s partners too.

1) Bad financial planning

As clichéd as the saying “money makes the world go round” may be, there is unfortunately a lot of truth to it, which is why, according to the CFVI report, bad financial planning is the number one perceived reason of financial vulnerability according to local consumers.

There are many options when it comes to financial planning… You can employ a professional or do your financial planning yourself and you can even make use of a bunch of handy tools to help with your financial planning too.

They say “knowledge is power” and knowing what compromises your financial wellness is the first step in minimising your risk and limiting your stress.