Three key money tips to save your sanity in 2021
With many people super stressed about finances due to Covid-19, the personal finance website JustMoney reminded us of three key elements – budgeting, spending and debt – to focus on.
As we approach the end of January, South Africans remain super stressed by the impact of the Covid-19 pandemic.
The festive season has been a subdued time for most of us. An end-of-year 13th cheque or bonus remains a dream – we count ourselves lucky if we still have a job. We’ve also not enjoyed the psychological support we’re used to from meet-ups with friends and traditional family get-togethers.
“Anxiety and procrastination are normal at a strange time like this,” said Shafeeka Anthony, marketing manager of the JustMoney personal finance website.
It seems almost impossible to break free from unhealthy habits and routines. Many people feel frustrated and angry at the situation they find themselves in, 10 months into lockdown, with no solution in sight.”
Nonetheless, making adjustments in the following three areas can help you to feel more in control of your finances, Anthony said.
• Work out a budget: Understanding what you spend your money on is the first step in financial planning. The trick is to figure out a way to track your finances that works for you. Check the amount of money you have coming in, list all your regular monthly bills, then all your variable expenses – those that may change from month to month like groceries and entertainment. Credit card and bank statements are a helpful place to start since they list your monthly payments. Soon you will start to see where your money goes, where you have money left, and where you can cut back.
• Adjust your spending: Want-to-have expenses are the first place to look for when you want to make spending cuts. Make a list of what you really need, and only take advantage of sales and special offers if they relate to the items on your list. If the numbers still aren’t adding up, you can look at adjusting your fixed expenses, although doing so will be more difficult as these are items like rent and medical aid.
• Reduce your debt: First of all, understand the difference between good and bad debt. Debt is acceptable if, for example, it takes the form of a home loan and allows you to buy a flat or house for your family. Debt is bad if it does not increase your wealth in the long term. For example, you can easily get carried away with buying the latest fashions on a clothing account, running up items on a credit card, or taking up a cash advance loan. Debt is also bad when you miss your payments and the account goes into arrears.
“Addressing these key areas – budget, spending and debt – can save your sanity,” said Anthony.
The best advice is to try not to panic. Rather calmly assess your income and what you owe. Aim to get an overall picture of your debts and commitments, and where you can cut back and live more within your means. If you are already deep in debt, and dreading the thought of upcoming payments, then it may be time to speak to an expert. You are not alone – get help. Consolidating your debt can reduce your monthly payments and help you pay it off.”
