There is no denying the impact of the pandemic on many South African's finances. Every cent matters. But how can you prepare your finances to cover you and your family without putting further financial strain on yourself?
Here are five ways you can get started.
Start investing in the right cover
While we may not be able to predict the future, it is important to start investing in financial covers that will not leave you financially exposed. Never settle for the first cover, but carefully assess what is available to you in the form of income protection, disability protection cover, retirement funds, life & funeral cover.
Starting with life & funeral cover can make your journey to building a financial portfolio easier. MiWayLife offers both funeral and life cover under one policy which means you will pay one premium for two covers to protect you and your loved ones.
Cutting back on financial fat
The reality is that as many as 76% of South Africans run out of money before the end of the month. The high cost of living, loss of jobs, and low-income range which many people find themselves in make it difficult to sustain their lifestyles.
Furthermore, the middle-class is facing an ever-growing debt crisis. What can you do if you find yourself in an already tight situation? Finding ways to cut back financially is crucial.
You may need to speak to a financial advisor to find a practical and sustainable solution. This could also mean downsizing your house, trading your car for an affordable option, or looking for alternative stores that have lower prices for groceries and clothing.
Start thinking about the future
Things may be tough now, but not planning for the future can make things even more difficult. According to a survey by World Wide Worx for Tyme Bank, only 4% of the people that were surveyed were able to put aside money for retirement, children's education, investments, or emergencies.
The common mistake that most people make is to set a target that is unsustainable in the long run or avoid putting aside money altogether. Putting aside as little as 5% of your income or contributing R100 or whatever amount that you can afford or sustain over an extended period can be beneficial. It will also shield you from financial expenses that will blow a hole in any budget, which could push you into debt.
Be transparent with your finances
It's one thing, to be honest with yourself in terms of your financial situation, but many people struggle to be as honest with their loved ones. The last thing you need is to place more financial strain on your finances by trying to maintain loved one’s expectations of you. Be clear about your current financial situation, what you can and cannot afford. Discussing ways you can work together to save and cut back can reduce frustration and unmanageable expectations.
The old ‘B’ word
Budgeting is your friend. It also requires discipline. The reality is that you will have to adapt your budget frequently to keep abreast of your finances. It also means mastering the skill of avoiding temptations that cause you to overspend.
For example, it is unrealistic to say you are never going to treat yourself to nice things. However, creating a budget for how much you spend on entertainment and those nice things can reduce the chances of you overspending. Remember to always plan your big expenses to avoid getting into debt.