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