Along with other aspects of life, you may need to adjust your finances during this unprecedented time. Many were caught off-guard. It’s not too late for some financial checks and adjustments to be more prepared. Akash Dowra, Head of Client Insights at Discovery Bank, shares some tips and advice.
If you are employed in a stable work environment, you are likely among those who have not been as severely affected by the economic implications of COVID-19. Dealing with financial considerations as well as pressing health issues is daunting. However, there are some measures of maintaining and even increasing your financial stability during this time.
Use the time to analyse your budget
“Take any extra time you have now to draw up a clear budget. Reduce spending by working out the absolute necessities and then seeing how you can put any extra money towards saving. As a collective, South Africans are urged to stay at home as much as possible, which not only protects our health but also reduces spending that often isn’t entirely necessary,” says Dowra.
Make sure you’re protected against financial emergencies as much as possible
“Insurance, in all forms, is now more important than ever. This provides additional financial protection for you and your family for events, like a burst geyser (which has happened to me), as well as cover for illness included in health or long-term cover. Vitality Money clients receive incentives for ensuring they have these measures in place. Having insurance is part of a responsible financial plan that protects you and those you love against financial hardships in times of crisis,” he says.
Save as much as you can
If anything, this savings month highlights the importance of planning for the short, medium and long term. Now’s the time to set up an emergency savings fund if you are able to do so. “There is uncertainty about the extent and reach of the pandemic on all aspects of life. But there are positives. Interest rates on borrowing have dropped, possibly freeing up some money. You may also not be spending as much on transport costs or other services, if you are working from home. Save the extras if you can. It will help create a financial buffer that adds to your peace of mind. At Discovery Bank, you’ll also earn interest on any savings from the start – no matter how much you save,” says Dowra.
There is some certainty for your comfort
Dowra says there are opportunities to maximise good returns in the market right now. “Go to those suppliers and service providers whose role it is to take care of your finances. Your financial advisers, bankers and so on will direct you to the best returns available. For example, fixed deposits rates and returns on lazy balances (these are positive balances on cash in transaction accounts which don’t accumulate much interest) can be improved. Our clients earn up to 4% interest on every rand (positive balance) in their transaction accounts, which is unique in the market.”
Keep a level head
“In times of crisis, there’s a tendency towards rash and hasty decision-making. Now’s not the time to disinvest pension funds and pause savings, which will impact you later on. Keep tabs on your finances, perhaps with your banking app, and be assured that there are options out there to help maintain stability as this unfolds. This is a stressful time and you shouldn’t be making big decisions about finances unnecessarily,” says Dowra.
If you have a problem, there are solutions
“Service providers, the government, business rescue and the unemployment insurance fund are there to assist with solutions. If you find yourself in difficulty, speak to a qualified person who can direct you toward these solutions,” he adds.
“Now more than ever, if you are able to assist someone in need, on a business or individual level, you should. Continue to pay those you supported previously like informal helpers and local businesses. Discovery Bank has given clients the opportunity to donate Discovery Miles or cash using the Discovery Bank app directly to the Solidarity Response Fund, which will assist those in need of medical care, business rescue and more,” says Dowra.
- Internal analysis done on data from the Vitality Money Assessment.
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