THE catastrophic economic effects of the global Coronavirus pandemic has highlighted the need now, more than ever before, for careful personal financial management, says Al Baraka Bank financial advisor, Ayesha Haffejee.
In the face of the pandemic, Haffejee has stressed the need for people to undertake a financial re-think, given that business closures, retrenchments, short-time and temporarily reduced salaries are wreaking havoc with people’s personal financial commitments, leaving many unable to meet their financial obligations.
“The virus effectively stalled economic activity globally and with that job losses and pay cuts ensued. Few were adequately prepared for the financial implications,” she said.
Haffejee said personal budgeting and making budget revisions are now of paramount importance in order to maintain a degree of financial wellness in the face of some of the toughest economic times in South Africa’s history.
“Slashing monthly expenditure to cover only the bare necessities is advisable. The economic effects on people is ongoing and will be long-lasting,” she stressed.
The bank’s marketing manager, Yunus Paruk, said: “With lockdown now eased to level three, now is an appropriate time for consumers to review their money and financial plans, considering the changing economic landscape brought about by the pandemic.”
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Effective budgeting under current economic circumstances requires a robust approach and the ability to identify and prioritise only the most important needs.
“Budgeting in the face of a pay out or zero income means making huge sacrifices. The first thing is to negotiate keeping a roof over one’s head, revising payment terms or securing payment holidays. This is usually one’s biggest expense and by securing a reduced payment structure will immediately bring some relief. Thereafter, check with financial institutions regarding stopping debit orders on savings policies,” Ms Haffejee said.
She also said these tough times should be used to look at other personal expenses and to cut unnecessary elements. She suggested looking at data packages and mobile phone bills, giving consideration to securing more competitive deals post-lockdown.
Paruk suggested people introduce a system of continually cutting unnecessary or low priority needs.
“Now is the time to exercise caution in making major financial decisions. Be disciplined and realistic as to the affordability of purchases and only spend within one’s means to minimise debt,” he said.
Haffejee concluded: “Once the situation stabilises, both those who took pay cuts and those retrenched during the worst of the pandemic should again look at their finances and consider engaging with a financial advisor to see how to create greater wealth and liquidity in situations where less or no income exists.”
Caxton Local Media Covid-19 reporting
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