As lockdown restrictions ease in the wake of the ongoing COVID-19 pandemic, its impact on the economy will be long-lasting and challenging.
Beware of unnecessary spending
While the South African Reserve Bank opted not to increase the repo rate and has kept it at a record low, do not fall for the lure of low interest rates. Now is not the time for big decisions. It is rather a time for reducing debt and controlling unnecessary spending. It is a time for allocating more to saving and generating additional income streams, while waiting for the storm to pass.
With the country now at level 3 lockdown, there are more opportunities for people to treat themselves on non-essential items. Before you do that, ask yourself: “do I really need this right now?” Take the amount you would normally spend on these activities and place it in a savings account to provide you with a buffer, during these uncertain times. You can also use this amount to increase your bond or car repayments.
Prioritise your bills
Bond payments for homes, car instalments, school, and university fees and credit card repayments are obligations you have to meet, in good or in bad times.
Your service provider or bank may have relief programmes in place to assist you and provide some level of relief. Don’t be afraid to approach them. Not contacting them and simply not paying your instalments will not resolve your problem, in fact it may actually complicate your money woes further down the line.
For instance, if you are struggling with your home loan repayments, give your bank a call. They have several ways that could help with repayments, and the sooner you get in touch, the quicker they can begin reviewing your situation and find a solution for you.
The same applies if you are currently renting a house or apartment.
When it comes to the payment of school fees, write to your child's School Governing Body, advising the chairperson of your present financial situation.
Find money in your current budget
Whether you want to start saving, investing or pay off your nagging debt, it might seem impossible with your current budget.
Here’s a couple of places to find some extra fat in your current budget:
- Your DStv subscription. This is easily one of the things you can do without. A premium DStv bouquet costs R829 a month (that’s R9 948 yearly, think what you can do with that!). If you simply cannot do without screen time, you can opt for the cheaper Compact subscription at R409 a month. Even better, subscribe to Netflix, whose basic plan will cost you R99 a month, the standard plan R139 a month and the premium plan R169 a month. But, of course, you will have to take into consideration the cost of data.
- Your insurance premium. Shop around and compare your existing cover to other similar options. Make sure you match what you have and that your coverage remains comprehensive.
- Your gym membership. Do you even go to the gym? You probably can cancel this and take up something like running.
- Your shopping lists. Be clear about what you need to buy and don’t deviate from your list, buying unnecessary items.
- Your bank statements: Study your bank statement in detail, scrutinise your debit orders and subscriptions. Assess your banking fees and shop around for an account option that is still comprehensive but suits your banking needs and lifestyle. Also see if your existing bank can offer you more bucks for your money.
Avoid “get rich quick” schemes
If a deal sounds too good to be true, it probably is.
Use a side hustle to meet those money goals
A side hustle can supplement your income and start paying for essentials in your home. Or even better, you can direct the profits you make from your side hustle to settle debts, start investing, or provide for those non-essential items.
However, before you start, you need to do your homework and make sure you understand whether this is going to provide you with a real income. Often people realise too late that their side hustle is actually costing them money. Ensure that you fully understand your costs, including your time, petrol and data.
Once your side hustle starts generating money, open a low-cost bank account for the business so that you keep it separate from your personal finances. If you keep treating your business as an emergency fund to pay for ad hoc personal expenses, it will be difficult to get a handle on your earnings.
Challenge yourself during this time and seek expert advice from your bank. Contact 20 family, friends or colleagues and ask them if they would be interested in purchasing your service or product and take it from there. Do not let fear get in the way of getting your finances right.
Being ready to get things done. That’s Africanacity. And we’re here for it.