The COVID-19 pandemic was a rude awakening to us all, stripping back what we perceived as 'normal' to reveal the reality. It dealt a hefty blow to many South African's finances, forcing many to adapt quickly or find themselves backed into a corner.
It is through our challenges and mistakes that we are able to carve a way of moving forward. Despite the hardship that came with it, there are few golden nuggets that it has taught us moving forward when it comes to finances.
What you do today can affect tomorrow
While South Africans are resilient in many ways, the COVID-19 pandemic has proven to be a crippling hardship that has impacted millions financially. Research has revealed that after the first month of lockdown, 3 million people lost their source of income.
Before the pandemic, only 28% of households felt that they could still remain financially stable by the time it comes to month-end. Many people found themselves borrowing money to make ends meet, dipping into savings or asking family and friends to bail them out.
While we may not know what tomorrow holds, making plans to protect ourselves financially today can go a long way. Having a savings and emergency account is crucial when dealing with unexpected situations. The key is to start with an amount that you are comfortable with putting aside each month. Every cent counts in such situations and can come in handy when you need it the most.
Having cover is important
COVID-19 is not just a crisis that has impacted us financially, but it is a health risk that has proven to be fatal. Having policies such as life cover, funeral cover, income protection and disability cover has proven to be crucial to our financial wellbeing, especially in such times. The last thing anyone wants to deal with is having to stress about their medical bills, debt or who will take care of their loved ones when they have passed on.
Cutting back on things we don’t need
Nothing is certain during the pandemic and unfortunately going back in time to correct our financial mistakes is not possible. However, making the necessary changes such as cutting back on things we do not need and making means to pay off any debt that we may have accumulated is important. The pandemic has taught us to be cautious spenders; looking for affordable deals and making use of the lowered interest rate to save money.
Taking on more debt
Taking on more debt during this time can prove to be something that can end up backfiring in the long run. While there may be favourable loan options on the market that promise low-interest rates and payment holidays, it is crucial to ask yourself if this is something that you really need and if you will be able to pay it off in future. Always remember to pay off any debt you may have accumulated to reduce the amount you owe before taking on more.