Five financial mistakes to avoid during the lockdown
Take a look at these money-savvy tips on how to avoid financial difficulty during the lockdown.
Consumers should do everything in their control to keep their financial affairs in order through this difficult and uncertain times, a financial expert has warned.
“One cannot predict how long it will take for the [Covid-19] situation to stabilise and the knock-on effect on the economy,” said FNB consumer education programme manager Dhashni Naidoo.
“The idea is to adopt a disciplined way in managing your money and seek financial relief where necessary and possible.”
Naidoo had the below tips on what consumers should avoid in these tough times:
Don’t cancel your insurance
Insurance should not be used as a mechanism to free up cash. Once a policy lapses or you cancel it, you expose yourself and your family to greater risk. It may also result in higher premiums when you take up insurance again in the future or you may be excluded from certain benefits.
“If necessary, rather contact your insurance provider to see if you can reduce your premiums, as opposed to not paying or cancelling your policy.”
Don’t take up unnecessary debt
Where possible, you should avoid using credit to cover your living costs. Remember, the debt remains after this situation has passed and you will be obliged to pay it back. Rather look at how you can reduce your expenditure on non-essential items.
Don’t be too quick to make a big financial decision
We find ourselves in unprecedented times and we are uncertain of what the future might hold.
“During this period, we should exercise extreme caution in our spending habits and be realistic and even conservative about what we can afford. Before making any big financial decisions, you should determine if you will be able to sustain this should there be any changes to your income.”
Avoid seeking financial advice from family and friends
Don’t rely on your friends and family for financial advice. Consumers are urged to rather approach their bank, insurance provider, credit provider or financial advisers to get proper financial guidance.
Don’t spend money you don’t have
Cut back on luxury items and unnecessary expenses. Save wherever possible and use your loyalty reward programmes for relief.
“It’s important to exercise caution in your financial decision-making, be conservative in planning for the future and extra careful in how you spend.
“Furthermore, if your finances have been affected by Covid-19, consider the measures that your bank may have in place, including your credit life insurance that may cover some of your debts on qualifying claims,” Naidoo said.
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