There are many more stressing questions you have to ask yourself during these trying time…” Will I be losing my job?” …” Will I be able to keep up with my debt repayments without an income” …? “Will I have enough money to buy necessities by the end of the month”
Here we will be tackling solutions to these questions to help you and your personal finance.
You may be on a tight budget this month because of reduced pay, but it is still important to put aside any part of it that is not being used this month towards savings. The money you are saving towards transport and kids lunches and cooking at home can go towards your emergency fund.
You will then have a good buildup of extra cash to help you out during emergency situations. If you end up losing your job or need sudden medical care, your emergency fund can bail you out rather than taking out credit and increasing your debts.
Pay off your debt
During these times it is very important to pay off your debts, especially your short-term debts. This time may be trying on your financial situation but there are benefits to paying off your debt during this time. The interest rates have been slashed by 1%, this means that you will be paying less for your debts, so make the most of the reduction in payments while you can.
There are many concerns about job loss, so pay off your debts while you still have a job, this way you can make sure your credit score is unaffected and that you are able to negotiate with your creditors or debt counsellor if you lose your job.
The final question you may be stuck with around debt is: “How can I save if I am paying off my debts” You can, just start small, it will build up. If you fall into a tough financial situation while paying off your debt with no savings, the only thing you will have to fall back on if you hit an emergency will be more debt. If you start saving while you are paying off your debts, you can make sure you are secure in any emergency. On top of this benefit if you don’t end up using your emergency fund, you have a good base for your retirement fund.
How the lower interest rate affects you and your finances
The South African Reserve Bank (SARB) has announced that the interest rate will drop by 1% leaving the repo rate at 5.25%. This was announced to aid the economy while we combat the corona virus. Here are some points on how this will affect you and your finances.
- Borrowing of money is more affordable for you and businesses, this also relates to paying off your debts.
- Bond payments are less, and property is cheaper
- Assets such as housing are cheaper so it’s a good time to invest
- All these combined stimulates consumer spending and therefore stimulates the economy.
Follow these simple personal finance tips to better your financial situation and prepare your finances for these uncertain times.
Reference : meerkat.co.za/blog/news/personal-finance-during-covid-19/