A month or more at home might once have seemed quite a nice idea, but for most of us the novelty of not having to battle the commute to work has now worn off and the lockdown is beginning to take its toll.
Even though the restrictions have now been eased slightly, the reality is that most of us had mentally, if not literally, marked midnight 30 April as the moment things would get back to normal. They haven’t, and won’t for some time – even then it will be a new normal
At best that’s anticlimactic. It also adds to lockdown stresses arising from not being able to visit family and friends, juggling working from home while trying to educate and entertain children and being confined in a single place most of the time.
For many of us financial concerns make this stress worse. Some people have already been directly affected, having received retrenchment notices, being placed on compulsory leave or having to sacrifice commissions, increases and bonuses or absorb salary cuts. For others, the uncertainty of what might happen next week or next month can be just as worrying.
“While there’s nothing you can do about what has happened or might happen, there are some positive steps you can take to make yourself feel less vulnerable,” says Shafeeqah Isaacs, head of consumer education at financial services provider, DirectAxis.
“We do a lot of financial education in different communities around the country and it’s significant that in every case participants say the first step towards taking control of your finances is the most powerful.”
Three positive first steps you could take are:
Understand your situation – You need to know what your current financial situation is before you can make any decisions about your financial future. This means drawing up a budget. Most people don’t bother, either because it seems like too much hassle or they’re worried that their financial situation might be worse than they thought.
At its most basic, a budget is just a list of your income and expenses and will help you understand what you’re earning each month and where you’re spending it. This simple exercise will help you to decide if you need to reduce some of your expenses and where you can possibly make savings. Drawing it up yourself using your bank statement should be pretty easy. There are also plenty of tools you can use to help you such as: http://dafs.co/BudgetTool
Confronting reality can be intimidating if you’re concerned about your financial situation, but hope isn’t a strategy. It’s better to understand where you are to help you to decide whether or not you should speak to creditors about payment plans or find other help if you need it.
“Drawing up a budget is a positive way to face your situation and will help to improve your options and alleviate some of your worries and stresses,” says Shafeeqah. “Sticking your head in the sand and ignoring payment notices or skipping instalments will make the situation worse.”
Get an independent view: Once you’ve assessed where you stand, get an independent view of your financial reliability by checking your credit score.
By law South Africans can get a free credit report annually from one of the credit bureaus. Alternatively you can check your credit rating, for free, as often as you like, by registering on sites such as https://www.directaxis.co.za/pulse. As well as being free, it provides a lot of other useful information such as how your score is compiled, how you could improve it and also helps you to track your financial progress over time.
A good credit score is always useful but particularly so in uncertain times. It increases your options in terms of the financial offerings for which you are eligible.
Set some goals: Understanding where you are and how the financial world views you, should give you some ideas about how you can improve your financial situation.
Try and find if you are able to make some savings. You might be able to use some of this money to pay off short-term debt or settle debts earlier, giving you some future flexibility. Or you might be able to save some money in an emergency fund, which is always a good idea especially when things are so unpredictable.
When making your plans try to set some attainable, short-term goals as well as some longer-term objectives.
Reaching short-term goals, such as cutting some unnecessary expenses each month, will give you a sense of achievement. This will help motivate you to realise your longer-term targets, such as reaching a target balance in your emergency fund or paying off a student or car loan earlier than you’d planned.
“The most difficult part is getting started. Just do that and you’ll find each successive step gets progressively easier,” says Shafeeqah. “What’s more, the benefits of doing so aren’t only financial. Taking control of your finances will also give you more peace-of-mind.”