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Managing Personal Finances in the Wake of COVID-19

Have you ever wondered if managing personal finances is important or necessary? With COVID-19 wreaking havoc on our financial stability as individuals, we are now given the opportunity to appreciate the importance of smart financial planning.

managing personal finances

The Importance of Managing Personal Finances

As South Africa enters into phase four and week 6 of the national lockdown, our economy has taken a knock of gigantic proportions.

Small businesses have closed their doors, employees have been retrenched, business owners are fighting for UIF and countless workers are wondering when they will be allowed to go back to work to earn a salary.

Although there have been some survivors of this economic crisis, there are some households that are facing the reality that their financial stability depends almost solely on that of the country.

According to the latest Momentum/Unisa Household Financial Wellness Index, a mere 25% of South African Household can be considered financially well.

What Does it Mean to be Financially Well in the Context of COVID-19?

The following are 3 major elements that make up financial wellness:

  • Assets, debt and wealth
  • Income, expenditure and saving
  • Personal empowerment

How Does COVID-19 Affect Financial Wellness?

Assets, Debt and Wealth

With financial uncertainty that the extended lockdown brings, many households may be scrambling to cash out their investments in order to earn some income or in fear of losing value of their investments dropping.

Cashing out on your investments now will have a major impact on your future and your ability to catch up again. Your investment value will fluctuate as the market values do and it’s better to leave all your investments where they are.

Income, Expenditure and Saving

With many businesses closing and the alarming rate of loss of employment across the country, households will struggle tremendously to earn an income.

Being under an extended lockdown means there is less chance to spend money on non-essential items which is beneficial.

However, reduced income means that there is less opportunity to save money in an emergency fund that can provide a much-needed buffer in the future.

Personal Empowerment

Social media and the spread of misinformation can create a lot of panic around the current state of affairs as well as our future.

Many individuals may fall victim to making a decision based on illegitimate information, resulting in added financial stress and diminished financial wellness.

It’s important to always fact check information, do your own research and if you’re still unsure if you’re managing personal finances properly, speak to our financial advisors.

Managing Personal Finances and Cashflow During COVID-19

Here are 5 tips on managing personal finances during a crisis:

  • Know your expenses

Reassess your expenses and eliminate unnecessary spending wherever you can. Create a new budget plan that takes into consideration the current state of affairs, your job status and savings

  • Communicate with creditors when you can’t pay

If the lockdown has had a substantial impact on your salary or resulted in job loss and loss of income. Contact your creditors to find out about any payment arrangements they might have on offer

  • Save wherever you can

Look at your previous spending patterns and take the amount you would usually spend for entertainment and other non-essential things

  • Use digital banking wherever you can

Using cell phone and digital banking during these times can not only minimise your banking costs but also limits your potential exposure to the Coronavirus

  • Be vigilant

Criminal activity will be increasing during these times. If you have to draw cash from an ATM, make sure you don’t accept help from anyone you don’t know. No matter how desperate you are to make extra money, be aware that there are many scams circulating that aim to take your money; if it sounds too good to be true then it probably is. Don’t use public computers to do your online banking and never send your login details via text message

Olemera Financial Advisors – Helping You Manage Your Personal Finances

COVID-19 has left many businesses and households with an uncertain financial future. However, with the support from one of our financial advisors, you can ensure you build a strong future for yourself and your family, despite the pandemic.

If you would like more information or tips on managing personal finances during the COVID-19 pandemic and beyond, please contact us.

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