Due to the “new normal”, most of us have had to make various adjustments when it comes to money. There are some positive lessons we can take with us into our financial future.
Here are some 2020 learnings that could help you manage your money better.
- Lesson: We can save more than we think
Retailers were allowed to sell only essential goods under levels 5 and 4 of the South African lockdown. As a result, we were all forced to shop only for necessities. This meant we saved on spending when it came to things like clothes, make-up and even gadgets.
Tip: Use this lesson to splurge less on items you don’t need. For instance, budget for one “spoil item” per month so that you don’t spend money you don’t have.
- Lesson: An emergency fund is vital
In the past, we might have thoughtan emergency fund would be used for a broken window,not a pandemic. But, from retrenchments to salary cuts, most of us have been affected by the blow of the pandemic to the South African economy.
Tip: Continue to prioritise saving money where possible and try to keep your emergency fund at a value of at least 6 months’ worth of your monthly expenses. It will take time to get into the swing of saving, but you can make the process easier by:
- Tracking where all your money is going every month
- Cutting down on unnecessary purchases, such as takeaways
- Creating and sticking to a budget
- Setting savings goals
- Keeping your savings in a separate account
- Lesson: We aren’t supporting local businesses enough
As most online retailers and supermarkets struggled to meet our demands, we were forced to actively find local businesses where we could buy goods. This opened the door for new local options for purchasing fruit, vegetables, dairy products and more.
Tip: Although retailers are now open and most items are available for purchase, try to support local small businesses instead where possible.
- Lesson: We should be careful of the debt trap
One big thing that 2020 has challenged is our “permanent” income. This has highlighted the importance of being very cautious when taking on any kind of debt. When you have lots of debt, losing your income doesn’t only mean you won’t be able to cover your expenses, it also means you won’t be able to repay the money that you owe.
Tip: Think carefully before taking on any debt, and prioritise managing your finances so that you don’t have to borrow money.
- Lesson: We can do without luxuries
You may have missed your takeaway coffee or Saturday brunch, but by now you’ve realised you can live without these types of luxuries and that you can save quite a bit, too!
Tip: Continue to maximise your savings even after the lockdown by skipping luxury items like overpriced takeaway coffee and meals.
- Lesson: Living healthily doesn’t have to be pricey
Most of us have had to be creative when it comes to working out, since gyms have been closed. As a result, we turned to home workouts, workout apps and online exercise tutorials. We’ve also had to cook more than ever since takeaways weren’t an option for a while.
Tip: Continue to save and live healthily on the cheap by using gym alternatives such as workout apps, like Home Workout. Skip takeaways as much as possible and cook your own meals at home instead.
- Lesson: Medical aid is important
If an earning family member falls ill, the loss of income can bring financial challenges to your household if you don’t have health insurance. The unexpected expensive hospital and medical bills may be beyond what the family can afford to pay.
Tip: Get adequate medical aid to cover unexpected costs such as hospital bills so you don’t have to pay out of your pocket or take on debt when faced with medical emergencies.
The information in this article is for information purposes only and does not constitute professional advice.