Few people have come through the Covid-19 pandemic unscathed as South Africans have had to dig deep into their savings and take on more debt to survive.
As life begins, slowly, to return to something like we knew before lockdown, it is time to turn our focus to our ravaged finances.
Andiswa Gqwaru, client success lead at Momentum, says: “We need to find a way to be positive and reframe our position. We need to bring back the positivity that came with the beginning of the year.”
He has the following advice:
- Begin with a strong base. Put 20% of your gross income into savings. “You might think that is a lot, but if you work for a company with benefits, 15% of this is already saved. Work on having an emergency fund to cover six months of living expenses and have insurance to protect your assets.
- Get rid of bad debt such as credit cards, personal loans and store cards. “If you keep your bad debt as low as possible, that means that your income is strong and fully dedicated to keeping your house in order.”
- If your building doesn’t spread the load evenly then it is bound to fall apart. The same goes for your finances. How do you spread out the financial load? It starts and ends with a budget.
- Draw up a realistic budget that covers your needs, wants and savings. Ideally, the things you have to have — food, shelter, and so on — should take no more than 65% of your income. That leaves you with 20% for savings and 15% for the things you want but do not need.
“The trick to doing a budget is to realise that every rand should have a job with no exceptions. With a budget, you can see what trade-offs you are willing to make without extending your spending beyond your means and being tempted to accumulate bad debt.”
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