While things may have been on hold due to the pandemic, our financial commitments remain. Knowing how to handle financial blows can make moving forward easier. Here are a few practical steps to take to get you started.
Can you survive 3 months without a salary?
One thing that the COVID-19 has unfortunately pointed out is that nothing stays the same and if you are not prepared to adapt with ease you could be left behind.
Since the start of the pandemic, 23.8% of South Africans have revealed that they had decreased access to finances. Furthermore, 40% of South Africans have enough money to last them a month or less should they be faced with an unexpected financial situation.
Having an emergency fund is crucial to covering those financial blows that come by unexpectedly. However, a common mistake is to have unrealistic saving goals. Not only will this make it overwhelming to keep with your savings goal, but it can also cause people to dip into your savings too early to cover basic expenses. Put aside an amount that you will be comfortable saving each month and gradually grow your emergency savings.
Investing in insurance
Having insurance is an investment. Things such as life insurance, car insurance and income protection are specifically designed to protect you and your loved ones from these unforeseen circumstances that cause our finances to take a blow. The benefits of having insurance is that it is affordable. For example, you can get access to life insurance for the price of a pizza! The golden rule to insurance is to have it as soon as possible to avoid paying higher premiums when you are older.
Less is more
Cutting back on unnecessary expenses is the easiest way to save money and redirect it to other areas in your life. You may need a financial advisor or make use of the 22Seven app for this to make sure that you do not cut back to the point where you become uncomfortable. Making a list of all your expenses, right down to the amount you pay for data and airtime can help you assess where your money goes. It can also help you compare your way to better-priced items.
The cost of living is never fixed so why should your budget be? Learning to adapt your finances is a crucial skill that you will learn over time. However, a great starting place is to always do a review on your budget every 2-3 months.
Avoid spending money that you don't have in your bank account, but gradually increase your spending according to your income increase. Never be afraid to cut back where you need to by letting go of assets that you do not need or are becoming financially taxing. You can always make your way back, once your financial situation has improved.