There are some risks worth taking but rolling the dice on insurance is not one of them. Every year there are over 1 million car accidents, 18,000 car thefts and 250,000 burglaries. While very few people get excited about their monthly premiums they do a happy dance when they experience a loss or theft and their insurance policy replaces or fixes the items with a smile.
When you consider the cost of having to replace an asset like a car or a home from scratch, the premiums we pay are negligible. Despite this, a large number of individuals are still prepared to spin the roulette wheel. While we all would like to have an insurance portfolio that protects us from every possible calamity, we often believe it’s out of reach because there are more pressing things that have first dibs on our cash. However, just a few minor tweaks in our budget can make it possible for most people to afford cover.
The first place to look for that elusive cash is in our existing budgets. When we get paid at the end of each month, we often spend like rich people, by the middle of the month our balances are on the wrong side of healthy and by the end of the month, we are scratching in coat pockets hoping to find a forgotten note. The first step to stopping this cycle is to play a game with yourself, it may sound silly-but pretending that your next salary cheque is the last one you will get for three months, will recalibrate your brain. You will spend like a miser and by the end of the month you will be shocked at how much money you have left over. The next step is to examine your spending habits and become more aware of the money you routinely waste.
If you buy one sushi dinner, have one or two nights out with your friends and routinely trawl the malls each weekend, you can easily spend R1000 per month. Cutting back on entertainment can boost your coffers. While you are on a roll, also have a look at your exposure to debt. If you can pay off some accounts with your austerity measures you might even be able to keep your entertainment budget intact.
Taking the time and effort to invest in insurance is an extremely important decision and it will require a change in mindset. Instead of thinking that the money you are spending on insurance is a “loss” see it as a way to gain peace of mind and a significant protector of your wealth. If you want one more motivational push imagine this- you have a car worth R100,000, your repayments are R2500, per month, then a tree crosses your path without indicating and your car is written off. You will still have to pay the bank back and find the cash to buy another car – ouch!
The Hollard Insurance Company. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider.
