The current economic environment coupled with further challenges of income instability that Covid-19 brings requires ones to cultivate good money management habits and curb unnecessary spending. Here’s how
These uncertain circumstances are forcing us to think creatively about how we manage our finances and consider other resources to cater for the present moment and unknown future. The question to ask ourselves is how do we make each rand count and go a little further during this time? Here are five ways to do that:
Manage your resources – Review your budget by assessing what it is that you absolutely need. For example, prioritise necessities such as food, electricity, water, mobile airtime and data. Avoid spending on luxury items that you do not necessarily need. Reviewing your budget will help you identify opportunities to make reductions in spending, reallocate your spending and save some money.
Plan on how to use resources sparingly without wastage, e.g. cook cost effective, healthy meals, only enough for the family. Better yet, cook enough to enjoy for more servings to save on ingredients, time and electricity. You can freeze some of your fresh ingredients and meals to make sure that they stay longer, and you do not have to make repeated visits to the shops as this may expose you to impulsive buying.
Manage electricity usage by switching off all appliances that are not in use and try to do laundry in bulk unlike washing single clothing items. When using electronics such as computers, plug them when the battery appears low and unplug them once they are fully charged.
Keep an eye on your data usage and maximise free benefits. It is difficult to manage the use of data during the lockdown as we tend to use it more to connect with our friends and families, keep ourselves entertained or even connect to work or school for our children. We need to be conscious of our usage and the cost of it. When you are not using data, switch off the use of data on your device and only switch it on when you need to use it again.
With the limited movement, there is some cash freed up from transportation, fuel, take-aways, entertainment, every day coffees and other daily habits that we currently do not have access to. Try saving this money in separate savings account, so that it can grow by earning interest.
Managing debt – Paying off debt sooner will save you money. If you can still afford to honour your credit obligations, pay a little more toward them. Especially with the reduced interest rate, a little more toward your debt can reduce your payment terms and you can finish paying off your debt quicker.
In a case where you have had a loss or reduction in income but have debts to repay, contact your credit providers immediately to seek guidance and assistance. Ask questions about any relief measures that might be available as it is important that you fully understand the relief measures and conditions thereof. You need to ask questions about the costs and long-term implications of taking up a relief offer. Ask questions about interest rates and the implications in the long term in order to compare costs between different offerings before you decide or take up an offer.
Managing your credit better also means keeping a good relationship with your credit providers. If you are unable to make repayments, contact them, hiding or ignoring them may lead to financial penalties which affects your credit profile in the future.
Readjust your budget – Changes in our day to day lives has resulted in changes to our spending patterns. This therefore is a good reason to look at our budget with a different lens or new perspective. Reduce costs wherever possible, both on needs and wants. You might not be able to change some fixed expenses like rent, but you could look at reducing expenditure on variable expenses such as transport, electricity and food. If your income has been affected or reduced during this time and you are struggling to meet your financial commitments, like insurance, contact your service providers to see if you can reduce the cover(s), which might reduce the premiums and free up some cash. It’s not advisable to cancel policies.
Don’t cash out your investments – Do not cash out your investments unless you have no other choice. Cashing out your investments during this time will not assist you in achieving your financial goals. If possible, leave investments as they are and give the market time to pick up, so that your investments have the best chance to recover, and yield better value for you.
Maximise on your loyalty programmes or rewards – Most consumers have a number of loyalty programmes with cashback rewards or discounts on retail shopping. Use your loyalty rewards to cover some of your daily expenses or get discounted prices.
Source: supplied
Words: Dhashni Naidoo, FNB consumer education programme manager
