For all the uncertainty that the lockdown has conjured, one of the most valuable lessons to come out of this has to be our relationship with money and how we plan for life’s uncertainties. Now more than ever, the COVID19 pandemic has taught us that we need a new approach to financial planning, or for some us, we need a strict reminder to remain committed to our plans. Use the lessons below to assist with financial planning:
Always have an emergency fund
It’s important not to underestimate the importance of an easily accessible savings account to outmaneuver the uncertainties of life. Whether it’s a short term convenience for paying rent when you lose income, buying data for studying online, or assisting family members when life happens.
Many experts advise having 3-6 months’ worth of living expenses set aside. That kind of saving requires discipline but trust me, you will thank yourself for putting away cash regularly for a rainy day.
Spend money wisely
Before the lockdown, you could have probably easily saved a R1000 a month from eating out less and Ubering. Thanks to locking down of economic activities and reduction of disposable income – preventing us from sitting out at restaurants and going out, this has made us realise how easy it is to save money if we can apply a bit of discipline to things we can do without or less of.
Of course, everyone deserves leisure from time to time, but going overboard may be unhealthy. You must remember that cash in hand does not mean cash to spend. Use this time to reflect and evaluate if some spending can’t be re-directed to a savings account.
Gain clarity about your work contract
Retrenchment and pay-cuts have become a reality for many South Africans. If you are a young professional, sometimes asking questions can become intimidating. But it’s important to always ask the right questions regarding employee rights and benefits in case of retrenchments.
Sometimes we often let the excitement of securing employment overlook the fine print, but if this pandemic has taught us anything, it is important to understand employee benefits and rights should any career storm hit you.
Get a passive income/ side hustle
It is no secret that many businesses were put out of operations during Covid19, leaving millions of people uncertain when they would receive their next salary. On the brighter side of things, this has shone a light on the value of having a passive income or starting a side hustle.
If you have a skill that can be monetized, do it! Do you have a creative flair? Make and sell earrings. Become a paid freelance writer. Invest money and earn interest. Stop making excuses and start that business now. Let go of your fears and put yourself out there.
You’re never too young to budget
Our current economic climate has encouraged a lot of people to start budgeting. But you should not only be budgeting in times of crisis. Make it a part of your life. Remember you’re not too young to start forming these healthy habits.
In fact, it is probably the best time to familiarise yourself with budgeting at an earlier stage so that it becomes second nature when you’re older. Keep track of your income and expenditure and pay of debts. Stay committed to sticking to the budget. Your future self will thank you.
It is always empowering to have control over your finances as opposed to your finances having control over you. Getting real and frank regarding your finances can be quite a daunting experience, but if you are transparent with your money, it makes it easier to avoid financial knocks.