Crises are difficult to handle because they’re unpredictable, but taking control of things such as your finances will put you in a better position to deal with uncertainty.
The 21-day lockdown in South Africa has been a bit of a challenge for many people. While many of us are working from home, others have too much time on their hands to do…nothing much. Well, how about using these four tips to better manage your money during this time?
Improve your credit score: Your credit score is the way the financial world sees you. It’s not about how much money you have in the bank or how much you earn, but how financially responsible you are. Free online tools can be useful by providing an easy-to-understand breakdown of how your credit rating is calculated and what you can do to improve it. You are also able to check your progress over time as often as you like. Benefits of improving your score is that you can get credit if you need it – an important consideration in uncertain times – and it could save you money. People with higher credit scores are regarded as less of a risk and can be considered for better rates on loans, insurance premiums and rentals.
Review your budget: Working from home could mean you’re saving on transport costs, but your water, data and electricity bills are higher. You may also have to account for that Netflix subscription you’ve just taken out.
Getting a clear picture of how you’re spending money puts you in control. It also allows you to determine where you might be able to make some savings and perhaps put a little money aside in an emergency fund.
Pay your debts on time: Although the economic impact of the Covid-19 crisis isn’t yet known, it will be substantial. Banks have been working with the South African Banking Association to find ways of helping customers meet their obligations, so check your financial services provider’s website and social media pages for updates.
But remember, skipping monthly payments now in the hope that there will be some sort of future leniency is a very bad idea. It will negatively affect your credit score and will put you in breach of your contract with the lender.
Improve your financial literacy: The better informed you are the more likely it is that you’ll make good financial decisions. Although the world is facing an unprecedented crisis, the fundamentals underpinning sound money management haven’t changed.
There is tons of information available online. There are also plenty of other financial service websites, news outlets, expert blogs, videos and columns. In fact, the volume of information can be daunting, so decide on a few subjects you’d like to know more about and start there, visiting sites you know are credible and reputable. Compare the results. Over time, you’ll identify the sites that offer information most suited to you and your needs.
Words: Shafeeqah Isaacs, DirectAxis’ head of consumer education