Please note:

The tips that are provided should be used as a general guideline and not as financial advice. Please consult with a financial advisor to find a plan that will be best suited to your financial situation.

Reassess the interest rate on your accounts

Understanding how the interest rate will impact your finances is key, especially when you have a loan or credit under your name. When it comes to handling debt during a recession it is important to keep in mind how the interest rate will affect your debt. Remember that not all debts are created equal, which means the interest rate could affect debt differently based on whether your repayments are linked to a fixed or prime interest rate. A change in the interest rate can impact your repayments and affect your budget however, with a fixed interest rate you should be able to maintain your repayments at a set amount. Try to reduce what you owe as much as you can and avoid taking on more debt.

Think of financial planning

Whether it boils down to your budget, cutting back on expenses or reviewing your investment portfolios, financial planning will play a key role during this time. Remember to always assess your current financial situation according to your needs. Speaking to a financial planner can help you find ways to realistically cut back and maintain the lifestyle you want without spiralling into debt.

Start saving towards a rainy day

A common mistake is to cut back on the things we need such as saving, but this could come back to haunt you when you need it the most. While saving what you are used to putting aside may not be possible for some of us in this economy, choosing to reduce the amount instead of cutting your savings can be life-saving. Assess your budget to see where you can cut back or find affordable alternatives to keep you afloat.

Adjust your personal financial goals 
Taking the moment to be honest with yourself and your family can go a long way. You may have had some financial plans for the year, but touching base with what is currently happening, and your current financial situation may require you to adjust your personal financial goals. Having an honest conversation with yourself about what you can and cannot afford can help you assess your budget realistically and find ways to be creative with what you have. Remember that a budget is not something that is always fixed but needs to be adjusted to the current situation. 

Take advantage of financial breaks

There is no shame in going back to the drawing board. Talking to your insurers and financial providers regarding your current financial situation can work in your favour. Not only will you be able to negotiate your way into a financial break until you are able to make repayments or find a more affordable plan, but it will also help you avoid legal action that can land you in even bigger trouble financially.