There’s a lot happening now that is beyond our control and for which we could never really have planned for. It’s a challenging time for many and everyone’s circumstances are different. How you manage your finances during a crisis like this can really make all the difference!
Here are 4 tips to consider to help you through this tough time.
(Translated and published in Die Beeld on 30 May 2020)
Draw up a plan
The first thing I’d suggest is to draw up a financial plan for the next 6 months. This is a lot simpler than it may sound.
Start by listing all your essential expenses for the month as well as known expenses coming up in the next six months. Anything from school fees, servicing the car or special celebrations. Looking at all the expenses you now need to see if you can cover them with your income, and if not, you’ll need to make adjustments. This can be a challenge as you decide on priorities and possibly defer expenses for a later date.
Everyone has been affected during this period and it’s certainly not “business as usual”. Understanding your situation and making a plan will help you through.
Honor your debts
Try as far as possible to honor all your debt payments and to not take payment holidays offered. Taking the reprieve offered by many financial institutions will certainly assist in the short-term, but you will end up paying a lot more on your debt as the interest and fees are still being charged to your account. It’s better to pay at least the minimum amounts due on each debt, but if you can afford the full installment, even better.
Best however is if you can keep paying the original installment prior to the recent rate cuts. That way you’ll be paying extra into your loan and will be able to pay the loan off sooner.
Set up an emergency fund
It’s never too late to set up an emergency fund. This is a savings fund for the unexpected challenges that life throws at us. No matter how well you plan, unexpected expenses pop up that you just can’t avoid. Medical bills, visits to the vet, a burst geyser and an excess payment or suddenly needing to replace the fridge.
You may be struggling to make ends meet right now, but if possible, set aside a little money towards these unplanned events. This will help you survive the month when something does in fact crop up.
Once the lock-down is over and we return to “normal life”, it would be a good idea to focus on building up a decent emergency fund of at least one months expenses.
Don’t make drastic investment decisions
There is a lot of uncertainty in financial markets around the world and you may have seen your investment drop by around 20% a few weeks ago. Things have mostly recovered but who knows what will happen in the next few months. Now is not a good time to make rash decisions regarding your investments. If circumstances allow, rather leave your investments just as they are and avoid looking at the investment statements.
If you’re close to retirement age and are worried about your investments, or if you need cash now, consult with a trusted financial adviser before doing anything drastic. In times of uncertainty we’re often guided by emotions and fear and need a level-headed professional to help us think things through.
These tips may sound simple but that doesn’t mean that they’re easy. When you think about how to best manage your finances during a crisis, it’s all about priorities and making sure that you can survive!
Each of the above tips can really be a whole topic on it’s own, so find the area where you need the most work and start researching and taking action!
En die Afrikaanse vertaling wat in Die Beeld verskyn het is hierbo.
- Beplan ses maande vooruit
- Delg daai skuld!
- Skep ‘n noodfonds
- Vermy jou beleggingstate – tensy jy ‘n krisis het
All really great tips, thank you for sharing!