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How financially healthy are you? Use this calculator to find out

Financial health is far less about how much money you make than about what you do with it, says Discovery Bank

21 February 2022 - 12:36
Take control of your finances today: Discovery Bank can show you how.
Take control of your finances today: Discovery Bank can show you how.
Image: Supplied/Discovery Bank

Sadly, most South Africans are not as financially healthy as we should be.

We typically save less than the populations of many other countries and have higher levels of debt, with credit use growing faster than employment. Furthermore, many of us are underinsured and not sufficiently prepared for retirement.

The good news? No matter what you earn, it's never too late to take steps towards a better financial future. That's because financial health is far less about how much money you make than about what you do with it.

“Earning a high income does not necessarily equate to being financially resilient or financially free. It's about being aware of how your actions can affect your financial health down the line,” says Discovery Bank CEO Hylton Kallner.

Discovery Bank's 2018 research confirms that lower-income earners who control their financial behaviours typically have better financial health than people who earn more but have poor financial behaviours.”

Better financial health boils down to doing five things:

  1. Spending less than you earn;
  2. Saving regularly;
  3. Insuring yourself against high-cost or unexpected events;
  4. Paying off property as soon as you can; and
  5. Investing for the future and retirement.

Discovery Bank's research into why people are typically not able to meet financial obligations shows that these five specific behaviours, if left unmanaged, are linked to 80% of financial defaults.

“Without adopting these behaviours, we can expect even higher levels of unaffordable debt and exposure to loss of income or unplanned expenses that are financially draining. In the long term, more people will not have enough income in retirement,” Kallner says.

Solutions for a stronger financial future

There is a definite link between financial knowledge and financial health. In an international survey on financial literacy, South Africans ranked the lowest out of 20 countries.

“With a better understanding of financial services and products, people are more in control of their finances. Those who are in the habit of saving regularly at the start of every month have emergency savings and can cope with unforeseen life events. Similarly, those who follow a budget have more money left in a month,” says Kallner.

The more you understand about working with money, the better your financial decisions, including managing debt and retirement planning.

Discover Bank encourages customers to adopt these five positive financial behaviours, and rewards them for doing so with Vitality Money, which forms an integral part of its product offering.

Vitality Money nudges people with personal goals to save, control debt and find ways to invest. All the financial education tools are ultimately there to help clients manage their money better.

“We know changing behaviour can be a challenge. With Vitality Money, people develop a greater understanding of how their financial behaviour today can affect them in future. The rewards of better money habits are immediate with Discovery Miles, personalised interest rates and more. Over time, behaviours such as saving, investing and insuring against unexpected events all add up to a healthier financial future,” says Kallner.

Check how healthy your financial behaviour is with the Vitality Money calculator. It takes just a few minutes to learn about how you perform across the five behaviours that determine your financial health. Learn how to change those behaviours where you’re not performing well and take control of your finances today: Discovery Bank can show you how.

This article was paid for by Discovery Bank.

The Vitality Money Status Calculator is for information only and does not constitute financial advice. Please consult your financial adviser before making any financial decisions.