How to budget when every cent counts
“If your income has been reduced by 20%, you need to trim 20% off your expenditure."
Millions of South Africans are balancing on a thin financial line as the Covid-19 outbreak hits hard resulting in salary cuts. Now, some have to dip deep into their reservoirs while it also forces people to have a stricter budget that will prohibit hitting rock bottom during the lockdown.
According to Budget Insurance, a recent survey revealed 78% of South Africans believe the Covid-19 pandemic will have an effect on their personal and household income.
From Budget Insurance Susan Steward said in times of uncertainty and crisis, having a budget in place is essential and could assist in reducing anxiety and help people feel more in control.
“The pandemic will truly test our ability to make every rand and cent go exponentially further,” Steward said.
“However, with some careful planning and commitment, we can not only survive these unprecedented times but get into a savvy money management habit that’ll keep us financially fit beyond Covid-19.”
The insurance company offered these budgeting tips for Covid-19 and beyond:
– The first step: Draw up a list of your fixed expenditures and other monthly deductions and tally these up against your income. If your income has been affected by the coronavirus, you need to plan how you are going to reduce your expenses. For example, if your income has been reduced by 20%, you need to trim 20% off your expenditure.
– Don’t make any sudden moves: When we are in a fear-based mode, it’s best not to make any grand, long-term decisions. Some areas are easier to trim down than others so concentrate on them first. Remember, even the smallest adjustments can make a meaningful difference over the long term.
– Focus on the essentials: Once you have trimmed down on your non-essential expenses – take a look at your fixed or essential expenditure. Paying your bond or rent and keeping the lights on should take precedence. Is there a way you can negotiate on the payment terms until things settle down? Most providers are offering their customers some form of relief and flexibility.
– Nice to haves: During lockdown, the money you set aside each month for nice things like clothes, eating out, travel and entertainment should be channelled into paying off your essential expenditure.
– Earn and use your freebies: Chances are that you’ve been racking up quite a bit of moola or points on your rewards cards. Now’s the time to use them.
– Start or expand a side-hustle: Think of the things you’re good at doing or creating and consider how you can make money out of them, online.
– Turn your clutter (things you don’t need) into cash: Lockdown gives you the perfect opportunity to remove things you do not need. You could earn a healthy amount of money from the things that are just taking up space. Advertise them now for delivery after lockdown.
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