Personal finance and Covid -19: Tips on coping financially

Personal finance and Covid -19: Tips on coping financially

As we face this difficult, confusing time one of the very big realities for thousands of South Africans is a loss of income.

Many, especially those who freelance or own small businesses, find themselves unable to survive the next 2 or 3 months, should we need to be in lockdown for an extended period, without a constant source of incoming income.

Others have rapidly started to adjust their products to meet the supply and demand of such items as hand sanitizer and face masks whilst the population spent a large majority of their salaries panic buying in fear of the Coronavirus effects on our country.

So, how do we take control of our personal finances going forward?

1. Stay calm

It is challenging to make a rational decision in a time of crisis but it is crucial to remain calm and logical to protect your personal finances.

2. Take stock

Firstly assess your situation. How much available cash you have. Based on your monthly expenditures, roughly how long will this last you?

Bearing in mind that items like eating out, transportation, and retail shopping have been halted, you should be able to cut your expenses by a third before starting this exercise.

Adjust your budget accordingly to your new set of needs and any debit orders or debt.

Now is also a good time to cancel any nonessential expenses, like DSTV or Netflix if you know that you could better use that money. Be sure to check any terms and conditions before making any cancellations.

3. Do not dip into your emergency fund unnecessarily

There is no need to spend your emergency savings stockpiling food.

At the time of writing this, our food supply is not in danger and our shops have currently stocked up of all items previously sold out by those who did panic buy groceries.

Save any monies you have spare to assist in covering your loss of income.

4. Don’t go into debt

Although many of the banks like have offered some grace on interest repayments, the principal debt will ultimately follow you.

Reserve your credit as a last resort.

You may be concerned as to how you are going to afford all your bills and may even be juggling the priority of each one, but getting into more debt is certainly not the solution to meeting these obligations.

5. Communicate

Communicate with any of your creditors if you can not make payments on any accounts due to the pandemic having a significant impact on your salary or in the event of a job loss.

Most, should you contact them, will assist in working out a payment plan for you.

6. Build up a reserve

If you find yourself still receiving your normal income, take the amount you would have spent on things like clothing, fuel, entertainment, outings, or visits to the hair salon and day spa and place this in a savings account.

This way, should the lockdown be extended you will have a reserve amount to fall back on to meet your needs.

7. Keep learning

Update your knowledge and keep learning about how to make wise financial decisions.

Many financial institutions have blogs to help you gain better control over your personal finances and there are several reputable entrepreneurs like Rusty Tweed, whose sound financial and business advice offer valuable knowledge at this time.

And lastly, remember to try not to panic. When we panic we make rash financial decisions and these will impact our finances further down the line.

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