Financial Tips during tough times

The first thing is to not panic. It does not mean we shouldn’t put in measures to tackle the situation.

As we take heed of health precautions, let us not forget financial measures. This is a moment of reflection. We should check our emergency funds and establish how much they have and how long they can sustain us.

Tumelo Sejo Boitumelo

There are a few things to note that are within our control:

EMERGENCY FUND

This is the time to boost our emergency fund, or the account we have set aside for unforeseen circumstances. The current situation definitely fits the description, therefore it is time to look into that area.

Calculate the expenses for the next 3- 6 months, establish whether you will be able to meet basic expenses for the coming months looking at the fund.

If you do not have the emergency fund it is fine, may this be a learning experience. It is vital to create a plan of how you are going to allocate the income to cover expenses.

ADJUST YOUR BUDGET

Formulate a budget, and it should comprise mostly of essential and high priority costs.

Adjust your lifestyle and spending habits. The assumption is some costs will fall off due to the social distancing restrictions. The money spent on travelling for usual ceremonies such as weddings can be rechannelled for survival.

Avoid unnecessary trips that are possible because of idle time.

For those who are landlords or have extra sources of income, be prepared for the possibility that the money will not come. The customers or tenants are employed in various industries, and some have started retrenching, paying half salary and sending people home.

CUT DOWN EXPENSES

This is the time to cut down on all unnecessary expenditure and leave cash for the next few months, in case the situation worsens. The Covid 19 developments are dynamic, and we have seen drastic developments in the financial markets as well as statistics of those infected by the virus. There is a hard knock across board including the economy as well.

This compels all of us to prioritize our spending and focus mainly on our needs.

Avoid an appetite for items you do not ordinary purchase or include in your monthly expenses. This maybe upgrading on television subscriptions to a more expensive package. Ask yourself if this is an important adjustment!

Do not pay for it unless it is extremely important.

AVOID PANIC BUYING AND SELLING

There is a great feeling of uncertainty and fear during this time. It is still important to make informed financial decisions that are not emotional but logical. Therefore do not:

Sell investments out of fear, make sure it is a reasonable and not emotional decision.

Contact the financial institutions where you have made investments, to seek for advice and update amidst the situation.

There is however a great opportunity for investments especially in the real estate market. This is in the event you buy and hold.

RECOVERY PLAN

This too shall pass!

Therefore :

Use this time to create a comprehensive financial plan post the pandemic.

Look into more ways of generating extra sources of income post recovery

Learn more about various investments that interest you or best money management practices

N.B: Do not stop working on formulating your plans, the sun will rise again.

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