• Shelley van der Westhuizen

Cope with tough times by taking control of your finances

The global pandemic has the power to cause high levels of discomfort as it affects our health, relationships, work, well-being, finances and our futures.

Almost eight out of ten South Africans say that their household income has reduced because of the Covid-19 crisis according to TransUnion’s research on ‘The Covid-19 Pandemic’s Financial Impact on Consumers’.

Shelley van der Westhuizen, head of corporate financial well-being and engagement at Alexander Forbes, says: “Focus on the things that matter to you so that you can make it through tough times in the best possible state – for your physical, emotional and financial well-being.”

To regain control of your financial position, Van der Westhuizen recommends following these steps:

1. Understand your situation

Almost 70% of the people surveyed in the TransUnion research said that they were concerned about paying their bills:

  • Of this number, 46% said they would not be able to pay their utility bills

  • 42% said they don’t see themselves being able to make their rent payments

  • 39% said they won’t be able to pay their cellphone bills

Approximately 32% of all respondents said that they expect to be able to pay their bills for longer than one month but less than three months.

Van der Westhuizen explains, “This means that almost everyone is experiencing some financial pressure and most people think they will struggle financially. It is important to know where you spend your money and what resources you have. Make a list of your expenses, debt repayments, household incomes and any savings you have.”

2. Ask what you can change

Review your expenses in detail to find out which expenses can be reduced, delayed, or stopped. Perhaps you don’t need satellite TV as well as a streaming service. Shop around for cheaper rates on your insurance policies, downgrade to a cheaper cellphone contract if you can, or buy groceries in bulk and share the costs with family.

The point is: look at everything you’re spending your money on and don’t assume expenses are fixed. Start with a blank page and write down your essential expenses. Compare that to what you are spending to find the expenses you could reduce or stop.

In better times, many of us develop bad habits about money. We spend more than we earn and tell ourselves we’ll pay for it next month. Many of us don’t know how our spending compares to our income. We just see our debts growing. Before we know it, a high proportion of our income is being spent paying off debt.

3. Create a plan

In uncertain times where businesses and families are struggling to make ends meet, we need to do things differently. Once you’ve made a list of your resources and what you need to spend every month, work out whether you have a monthly shortfall. If you expect your income to stop or be reduced, work out how long you will be able to pay your bills. You now have a budget and the information you need to start making changes.

4. Be proactive

According to TransUnion, two out of five people have started to contact their creditors to discuss payment options:

  • 29% will use their savings to pay bills

  • 22% will borrow money from a friend or family member

  • 27% don’t know how they are going to pay their bills

  • 33% will only pay what they can afford

If you’re in this position, it is important to start planning to reduce, delay or stop any non-essential expenses. Consider taking other necessary actions to ensure that your money stretches as far as possible, for as long as possible.

A very important step is to involve your loved ones in this process. The important people in our lives can either have a positive influence by helping us stick to our budgets or have a negative influence by holding us back from reaching our goals. If children, spouses or other important people in our lives are included in setting family financial goals, it will be easier to say no when they ask for things that haven’t been planned for. In this way, parents can easily explain decisions about spending and will be empowered with reasons to say no when they need to, based on agreed goals and plans.

5. Start new financial habits

Now that you have a budget and a plan, stay on top of your finances by recording your expenses. Compare your expenses to your budget every time you spend money and check your plan every month and adjust it if needed.

If you had to say no to an unplanned expense, discuss if the expense fits into the family goals and if so, which trade-offs or sacrifices could be made to include a new expense in the family plans. This approach will ensure that as many expenses as possible are planned for and will lead to good family financial habits.

“By putting good financial habits in place, you will be using this opportunity to put yourself in a better position to achieve what matters most to you. Your financial adviser will be able to assist you with this process and will help to keep your financial well-being on track, even if you’re facing a temporary setback.”


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