Lockdown and the economic fallout will affect different people in different ways. Some are fortunate enough to still be receiving a salary but according to the recent Old Mutual Savings and Investment monitor, over 50% have experienced a pay cut.
Now is the time to prioritise where your money will go.
Find out what it really costs you to live — not what you think it costs. Excel has a great budgeting template to get you started. Go over your bank, credit, and store card statements for the first three months of this year and then compare that to what you are spending your money on now.
The one benefit of lockdown is that we discovered how much unnecessary spending we do because the government literally told us what was essential and what was not.
You may find that working from home costs you more in groceries and electricity, but you are saving on transport and other spending like eating out and clothes shopping. And remember to use any loyalty rewards to help pay for basic essentials.
If even by careful budgeting you still cannot make ends meet, the next step is to contact your service providers – this could be your cellphone company, insurance company, or medical scheme. Most providers offer options which could include downgrading your cover until your salary increases. Don’t just let your debit orders bounce, especially on insurance. A car accident or theft will only worsen your financial problems.
If you have investments such as a retirement annuity, you can suspend these for a period, but only do this if you really cannot come out after making those other cuts.
As a final resort, you can take up the payment holiday offered by the banks. This should not be your first action, as these debt holidays end up costing a lot more money than you realise and can significantly add to the period of your loan.
Also, even though it is difficult – try to keep up with other obligations like the payment of school fees – these institutions also have salaries to pay.