By Nico Strydom
The Covid-19 pandemic and the ensuing lockdown has had an enormous influence on many people’s financial position and has, among others, resulted in people increasingly incurring debt.
According to Neil Roets, CEO of Debt Rescue, the past three months have seen a rapid increase in the number of consumers with a large burden of debt, compared to the same period last year.
An opinion poll by Debt Rescue found that 85% of all South Africans need help, financially or emotionally or both, due to the Covid-19 pandemic. 55% needed financial assistance but could not incur debt. It was also found that many people were retrenched or their salaries were decreased.
John Kennedy, a director with Citadel, says it is precisely the challenges of the past few months that resulted in people easily losing sight of their financial planning. “Now is a good time to stand back and gain perspective.”
Begin by getting a clear picture of monthly expenses and spending habits and how they may have to change. Review all your debit orders and cancel those no longer necessary. However, make sure of the relevant terms and conditions.
Compile an amended budget that takes your current circumstances into account. Spending habits have changed considerably due to the Covid-19 pandemic and now is a good time to look at the influence thereof and how it could have an influence in the long term.
Identify all the essential items you spend money on and the items that are less important. Be thorough when you review each expenditure to make sure you aren’t wasting money. The lockdown has made people reflect about what is important and what is really essential. Consider cutting expenditure by looking at cheaper alternatives or doing away with certain things completely.
It remains important to still try and save. The Covid-19 pandemic and ensuing lockdown have, among others, resulted in people not being able to travel as before and this can be a way of putting away what you would have used for this. However, it may also have resulted in you having to use your savings due to a salary decrease. Still, it is important to put a plan in place to try and make up for this. You could, for example, consider supplementing your income by freelancing.
Debt Rescue: https://debtrescue.co.za/
Standard Bank: https://www.standardbank.co.za/southafrica/personal/covid-19/Managing-your-cashflow-during-COVID%E2%80%9319