Things that you have no control over can happen so fast and unexpectedly. You can, however, control your perspective and how prepared you are before they happen. COVID-19, the subsequent state of emergency and lockdown levels plunged many South Africans into unemployment. But things are starting to look up as we enter level 3, with more and more of the economy opening back up and many finally going back to work.
The rough patch that started in March this year made us realise how important having an emergency fund or a little nest egg can be. As we slowly head back to normality we also have to think of the future and prepare ourselves for incase something like this happens again.
So, if you are lucky enough to have continued working throughout this year, or if you’re finally going back to work now, here are a few things you can do to prepare.
Debt free is the way to go
Try to pay off your debt faster than the repayment plan stipulates. Even if you put R100 extra into your home loan, car repayments or study loan, you will be making a dent in the interest thus shortening the term of the loan. You should also try to get rid of credit card and store credit debt ─ these products usually have really high interest rates that can really add up over time. (Credit cards should ideally only be used in emergencies.)
Every little bit counts
If you have a job (even if it doesn’t pay much), put money aside every time you get your paycheck. If you pay a certain amount into a savings pocket or different account as soon as your salary is in your bank account, you won’t even know it is gone and won’t be tempted to use it. You’ll be surprised at how it can add up. When you need it, you’ll be glad you have it.
You should have an ‘emergency fund’ equal to three to six months of your essential living expenses or three to six months of your salary. Set that goal for yourself and build from there. Remember, it’s easier to set smaller, more attainable goals for yourself than it is being disheartened if you aren’t able to save hundreds of thousands within the first year. When you’ve saved three months’ worth of living expenses, set another goal of another three months’ expenses and so forth.
Live on one salary
This one will only work in a family where two or more members are employed. Consider trying to live on one salary for a month or two to build savings, eliminate debt, and prepare for the potential consequences of unemployment.
Automate your savings
Talk to your bank or set up a debit order that automatically deposits some of your salary into your savings account every month. You’ll be surprised how quickly this adds up if you don’t have to think about it.
Even though COVID-19 and the lockdown has been difficult for many of us, we can always learn from the experience and grow from it. If we come out the other end being super savers that’s even better!
Please visit https://sacoronavirus.co.za/ for more information about the current lockdown level.