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Covid-19: Time to flip the coin to your advantage

Mon, 20/07/2020 - 16:19

This year, National Savings Month will undoubtedly be an unprecedented one as the new reality surrounding COVID-19 continues to swirl around us, impacting every aspect of our daily lives.

“Some individuals are adapting to working from home and have fortunately not experienced any adverse impacts on employment and salaries while others have been recovering from job loss, retrenchments and salary cuts. Wherever you are on the spectrum, the impact of the pandemic has affected us all; leaving us feeling uncertain in one way or another,” says Mzwandile Mtshali, Executive of PPS Advisory Services and Enablement.

This has resulted in a dilemma that has pushed individuals to review their financial situation, and in some cases, make hasty, rash decisions they may have been able to circumvent. According to a recent Statistics South Africa online survey, 75% of 2,688 respondents said that they had to cut down on spending to cope, while just over half have also accessed their savings.

For those who have been able to weather the storm in their businesses or remained employed during this crisis have found a few extra blessings in the form of additional disposable income available at the end of the month due to:

  • A lower petrol bill or no daily commute costs;
  • Less eating out and daily cappuccino’s on-the-go;
  • Postponed local or international holidays; and
  • Decreased debt instalments due to reduced interest rates.

Consequently, for those in the midst of the worst hardship and financial distress have taken the opportunities to make use of relief packages offered by institutions such as payment holidays, applying for loans or reducing premiums to make it through the month.

“This is not just a month to four months of distress. There are many more months over which this will play out with crippling outcomes,” says Mtshali.

“As an organisation that believes in mutuality, at PPS, we encourage our members to make informed decisions to stay financially astute during this unrelenting time, as we head into an uncertain future, at least for the next 12 months” adds Mtshali

For those experiencing financial distress and even those who are more cautious about the future, explore the below tips to help you plan and structure the next few months.

If you are feeling the pinch:

  • Think about purchase priorities

It's about changing habits and making small changes. Consider making a grocery list or ordering your groceries online so that you're not tempted by additional items when strolling down the aisles. Have a relook at your subscriptions; you may find there are better deals available and ask yourself questions such as; is this essential, or can I afford it?

  • Ask for help

Some tenants are negotiating with their lessor's. Banks are also trying to accommodate their customers where possible with payment holidays or consolidating debt into a single personal loan. The old saying "you don't know unless you ask" applies, so give your bank a call and find out what your options are.

  • Policy premiums

Don’t consider cancelling your policy but rather contact your financial adviser to enquire about decreasing your monthly premiums or other possible options. 'It's better to be safe than sorry.’

If you have disposable cash:

  • Clear debt quicker

Interest rates have dropped, and potentially your monthly debt instalments have reduced. Try to keep paying the amount you were or even consider contributing a bit more if you can. Investing your ‘extra income’ back into your repayments will ensure that you enjoy the maximum benefit of the interest rate drop and clear debt faster.

  • Emergency fund

If you have an emergency fund, this is the ideal time to boost it further. If you don’t, consider starting one this month. Saving for a rainy day is critical because an emergency happens when you least expect it. You need to ensure that should the need arise; the funds will be easily accessible.

Advice that applies to everyone

If there was ever a time to set a budget and stick to it, it is now. It doesn't matter what your income is or how much funds you have available. It is essential to know and track where your money is going.

Saving money may not always be easy, but it can lead to a greater level of comfort for the future. Now is the time you need to speak to your financial adviser, especially if you are feeling anxious about your financial position and need professional help to develop a workable financial plan for you.

At PPS, our financial advisers are well-equipped to help our members in their time of need. Contact your financial adviser today to assist you in navigating these uncertain times.

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