If you are one of those people who have been putting off getting insurance, the recent VAT increase has probably got you thinking, “Oh well, what’s the point? Now I am definitely not going to be able to afford it – my budget is already too stretched”.
Insurance has been playing on your mind though because you know the value of it, but there are just too many other things you have to pay. You’re a classic too-much-month-left-at-the-end-of-your-budget case.
It may seem like a doom and gloom scenario but the fact that you are already working off a monthly budget is a big plus. Very few people do any form of monthly financial planning each month, let alone stick to it.
But the realisation that you don’t have any form of car, household or life insurance is bugging you. And, the fact that you can’t afford it is bugging you even more.
Perhaps the reason you can’t afford cover is that your budgeting skills need a little tweaking.
A great rule of thumb for a budget is the 50/20/30 method. This means 50% of your money should go towards fixed expenses (of which insurance would be one), 20% towards savings and investments and 30% towards additional/variable costs (petrol, groceries, entertainment).
Here’s a practical example: You earn R16 000 per month. Therefore, R8 000 should be dedicated to paying your fixed expenses, R3 200 to your savings and investments and R4 800 to your additional, varying expenses.
How does your current budget compare to the 50/20/30 method? Oh dear … not so well? If you’re picking up overspending in the 30% area (additional expenditure) you’re not alone. This is a common area in which people overspend, and it’s a big mistake.
What’s worse is many people sneak money from fixed expenses or savings and investments to fund their entertainment and luxuries for the month.
If you are guilty of this, then sitting in a scenario in which you “can’t afford” insurance is not reality, is it? And, if you think it’s too costly and this is why you can’t find the money for it, think again. There are options out there to suit every pocket and which offer excellent cover for your car, home and life.
Neglecting to factor in insurance as a fixed expense could put an end to your social life and other luxuries for a long time to come.
If your car is stolen or your home burglarised and all your valuables taken, the financial cost of recovering from this will be enormous without cover. Likewise, if you have no life cover what financial position will you be leaving your family in?
It is important to get insurance that suits your pocket or paying for it will become a grudge purchase. What it should be is peace of mind.
By speaking to the experts at Hollard, you will see how easy it is to put insurance in place that you can afford and that will give you and your loved ones the right protection.
