Wednesday | 22 April | 2020
By Anja van den Berg
The coronavirus is as much a test of financial resilience as it is a test of immunity. The most adversely affected sectors are taking a beating with mass entrenchments, and others are facing a sudden drop in income. What can you do to pandemic-proof your personal finances? Here are three top tips to get you in control of your money and save as much as you can:
- Get back to basics
First and foremost, don’t panic. Calmly review your personal and household budget – or compile those if you haven’t yet done so! – and evaluate the income versus the expenses. You don’t need to go high-tech, says Silindile Ngubo, a fund accountant at Cannon Asset Managers. “I work with spreadsheets all day, every day, and my budget is a very simple one. In pen on paper, which makes more sense to me. Savings and investments are line items on my budget.”
- Redeploy the money you’d usually spend on fuel, take-aways and shopping.
The COVID-19 lockdown offers a silver financial lining. Since you’re not allowed to go about your day in a typical fashion, you’re bound to save money on certain expenses. You will have less (or no) car trips and no travelling to your office, which means you are cutting fuel costs. You also can’t splurge on takeaway lunches or flippant retail therapy. Make a conscious effort to control your expenses – every bit counts! Now could be the ideal opportunity to redeploy that money to pay off short-term debt or start your emergency fund.
- Triage to cut any unnecessary expenses.
Triage is a term borrowed from the medical fraternity. It refers to crisis management in prioritising care to wounded patients in an emergency. It’s a way of allocating limited resources to minimise casualties. Spending triage is similar: prioritising your Rands in a ruthlessly logical way. Must-pay items are non-negotiable. You must pay rent and purchase food. But you can opt to contact your bank to discuss payment holidays on your mortgage. You can also leave the heat-and-eat meal on the shelf and cook (and freeze) your meals in advance. Cut spending on frivolities, mindless entertainment and unnecessary subscriptions.
Keep the household bills down by repairing water leaks, setting up a grocery budget and reduce your cleaning supplies. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that cleaning products are an immense waste of household income. All you need in your cleaning supply closet, he says, is bleach, vinegar, lemon juice, bicarbonate of soda or baking powder. Optionally, you can add vanilla or rosemary essence for a fresh scent. Alternatively, a bottle of all-purpose cleaner will work out more cost-efficient than purchasing a different bottle of detergent for each room (or surface) in the house.
* All information was correct at the time of publication.