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Let's work out a plan for your financial health

31 Aug 2020

We may have moved to Level 2 of the lockdown, but the economic effects of the COVID-19 pandemic have made an impact on many households. In challenging economic times, going back to basics to create a financial plan to keep you and your family afloat is key to helping you navigate troubling financial issues.

While we may have been saving on petrol and other items due to the lockdown, we have been buying more household items such as food, data and take-outs.

We’ve all found ourselves in situations where we’ve had less income than we had planned and asked ourselves the question - just how do I make my money go further?

The most practical way to track your finances and support your household by stretching your rands is to create a monthly budget, and then stick to it.

“A budget further supports you to prioritize your expenses. For instance, most households are unaware of how much they spend on groceries and entertainment.  Once you are aware of how much you're spending and on what, you become far more conscientious with your money,” says Liberty Financial Adviser, Sheila-Ann Robey.

Another tip, she adds, would be to review your short-term insurance policies and cell phone contracts to ensure that you're getting the best price for what you need.

The COVID-19 pandemic and the associated lockdown have been the ultimate stress test for most clients' finances.

Some of us have faced retrenchment and salary cuts, having to navigate their day-to-day expenses with financial uncertainty.

Knowing how your financial obligations can cope under more limited economic circumstances is called a stress test, everybody should be aware of how this works, Robey says.

If you are one of those who have been able to weather the storm in spite of these challenges and have been able to minimize debt and keep your financial plan in place, then you can be assured that your finances have been sufficiently stress tested.

“Life is inherently unpredictable and this is the motivation behind many of the financial products and services we offer our clients. Where clients have saved for a rainy day before the lockdown period, they felt the pinch a lot less,” Robey says.

Another useful avenue of practical advice is to understand how interest rates can affect you. They have a direct impact on your debt repayments, as well as the growth of your investments. 

“In a low-interest climate as we are currently faced with, clients may utilise the opportunity to squash debt quickly by maintaining their repayments at the same level as before the interest rate cuts, thereby reducing the interest and repayment terms on, for instance, a mortgage bond,” Robey says.

“Getting the correct financial advice when under pressure is critical to any households' financial stability,” she says.

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).