No-one knows what the future of the country, let alone the world, holds. It’s a good idea to keep your finances as healthy as possible until the dust settles.
As SA does its best to control the spread of the Coronavirus, many people have either lost their jobs or been forced to close their businesses, leaving them without an income. They’ve had to make difficult financial decisions.
Banks across the country have offered different measures to their clients to keep them going, but some people have looked for their own solutions. It’s important to remember, though, that a decision made in haste or panic can have far-reaching negative consequences.
Dhashni Naidoo, FNB Consumer Education Programme Manager, offers five tips to avoid potential financial disaster:
Don’t cancel your insurance. Insurance shouldn’t be used as a mechanism to free up cash. Once a policy lapses or is cancelled, you expose yourself and your family to greater risk. It may also result in higher premiums when you take out insurance again in the future, or you could be excluded from certain benefits. Rather contact your insurance provider to see if you can reduce your premiums.
Don’t incur unnecessary debt. Wherever possible, avoid using credit to cover your living costs. Remember, the debt remains after this situation has passed and you’ll be obliged to pay this back. Rather look at ways of reducing your expenditure on non-essential items.
Don’t make hasty financial decisions. We’re going through unprecedented times and insecurity. During this period, we need to exercise extreme caution in our spending habits and be realistic about what we can afford. Before making any big purchase or change of lifestyle, be sure you can sustain it if there are further changes to your income.
Avoid seeking financial advice from family and friends. You love them, but they aren’t financial experts. Rather approach your bank, insurance provider, credit provider or financial consultant to get proper guidance in managing your finances effectively.
Don’t spend money that you don’t have. Cut back mercilessly on luxury items. Save whenever possible and use your loyalty reward programmes for relief.
“If your finances have been affected by COVID-19, consider the measures that your bank may have in place, including your credit life insurance, which may cover some of your debts on qualifying claims,” advises Naidoo.
Additional reporting: FNB