06/04/2020
What can we do as consumers to ready ourselves for this period and ensure that our finances survive the economic challenges ahead? Below are five practical interventions you can start implementing in your financial life. Not all of us will have the room in our budgets to follow all these interventions, but you can start with the most appropriate items for you.
Find ways to earn an extra income. This is commonly known as the gig economy or a side hustle. The benefit of doing this is that you diversify your income and cushion yourself from being too financially exposed to underperforming sectors of the economy.
Allocate savings for a rainy day. If the low GDP projections of the Reserve Bank, National Treasury and the World Bank are correct, then we can expect more retrenchments to be announced across the country in the short-term. While you cannot always control whether you’ll keep your job, you have a degree of control on how you plan for emergencies like these. An emergency fund which can cover six months of living expenses will lighten the pressure, stress and sometimes trauma of losing your job.
Live within your means and don’t acquire unnecessary debt. Use any extra money to first pay off your existing debts and then allocate funds to a rainy-day savings account.
Reduce non-critical expenses from your budget. Many people enjoy the entertainment value of having multiple video-on-demand platforms and switching between Netflix on weekdays and Showmax on weekends. However, such non-essential items can be considerably reduced without compromising your quality of life. The money that would be saved could be used against paying off debts or allocated to a savings account.
Acquire skills that the economy needs. From time to time, the national government publishes a list of critical skills that are in short supply in the economy. When you track these lists over time, a pattern starts to emerge of key qualifications, sectors and skills that have low unemployment statistics and are attracting relatively higher financial benefit. Given the length of these lists, some critical skills may align with your passions and career aspirations. The benefit of education in the 21st century is that thousands of learning institutions have online courses, some of which are free.
Some of these measures have immediate benefits to your finances, while others require you to take a long-term approach to the development of your financial wellbeing. If you can encourage this discipline within the members of your household and your friends, you create a self-fulfilling cycle of financial fitness that will build on itself and serve you during tough economic cycles.
