By Anja van den Berg
With the prospect of no annual increases or bonuses this year and with many companies withholding dividend pay-outs, it will take careful planning to manage your finances. Karabo Ramookho, Strategic Retail Marketing Manager at Old Mutual, helps us to feel in control of our finances during the Covid-19 crisis:
- Classify (financial) goals: non-negotiable, postpone or cancel
You probably started 2020 with a great deal of enthusiasm and a long list of things you’d like to achieve. The Covid-19 crisis, however, has forced us to change direction and lockdown has brought into sharp focus what each of us sees as “essential spending”. Items you thought of as necessities may have moved to the “luxuries” column and planned purchases had to be postponed to a later date. Review your goals and their financial impact on your budget. Classify them according to non-negotiable, postpone or cancel, and assign new timeframes for achieving them. This process can help you manage your financial stress without feeling short-changed.
- Build your emergency fund one brick at a time
Comb through your income and expenses and adjust your budget to be smarter with your money. Your bank may offer a free budgeting app, which is a valuable tool for reviewing all your money transactions in one place. If necessary, sit down with your family and have an open discussion about your household spending. Reworking your financial planning will probably require sacrifices from everyone. Once you’ve identified areas where you can save, start (or add to) your emergency fund. An emergency fund is a critical cushion for when you have unexpected expenses or when your income takes a dip.
- Make arrangements with your credit providers
If you can, settle your most expensive debt first. Also, be aware of the adverse effects of skipping payments. If you are struggling to meet your payment obligations, talk to your credit providers to make arrangements. Many banks and other institutions are offering some payment holidays during this unprecedented time. Suppose you don’t make arrangements and just skip payments. In that case, it will impact your credit score, which can affect the cost of future credit and potential employment opportunities.
The South African economy will take a while to be fired up again. Yet, this doesn’t mean that you should forgo your plans or abandon your financial goals, Ramookho adds. “It remains important to strive for financial freedom and stay focused on your goals and what you still want to achieve in life.”
My Money Coach: https://www.mymoneycoach.ca/blog/5-strategies-for-getting-control-of-your-money.html