You are currently viewing Recovering Financially from Lockdown

Recovering Financially from Lockdown

  • Post category:Budgeting
That being said the topic of conversation that seems to be making its rounds is, “How do I financially recover from lockdown?”
 
Many people lost their jobs and unexpectedly had to live off their savings and credit cards. Others sold off what they could as a means of providing food for their family and keeping a roof over their heads.
 
This article focuses on rebuilding after the financial challenges lockdown put you through.

You got a new job... Now what?

1.

Start clearing the debt. One day at a time! Remember if you have various overdrafts and loans, then try and clear the ones with the highest levels of interest first. Every day those remain unpaid is costing you money.

2.

Depending on how serious the debt is, you could consider looking into a consolidation loan. You may be able to get a lower interest rate and having only one loan to pay off can give you a mental edge instead of leaving you overwhelmed.
Recovering Financially from Lockdown

3.

Start rebuilding your emergency fund. Those who have experience job loss know the importance of having an emergency money. The idea behind the emergency fund is to ensure that your expenses are covered for a few months should something unexpected happen.
 
Once your loans are in a manageable position, start rebuilding this emergency stash. This could be through a basic bank account or a Unit Trust. Either way, it needs to be stored in a place that’s easily accessible and withdrawing from it isn’t a mission.
 
Ideally the account needs to be one without excessive fees and growth above inflation is essential!

4.

One of the more obvious solutions is to cut back on a luxury lifestyle. You should spend what is left after saving, not save what is left after spending.

It is easier said than done especially when you feel like you finally deserve to splash out a bit. Try to remember the bigger picture though.
Ostrich

5.

Don’t be an ostrich! Keep you head out of the sand and eyes on the prize. Remember big picture and keep track of your spending through the use of a budget. Here is some info on budgeting and getting you started, https://www.growmatter.co.za/money-management-savings. The problem won’t go away if you ignore it.

The only way to rebuild is to keep putting one foot in front of the other and heading in the right direction. Make sure your partner or the other spenders in the house are also onboard so that you are working together!

Our next blog Retirement Planning through the different stages of life. 

mergency funds are usually made up of liquid assets, meaning that they are easily accessible and it’s convenient to withdraw cash.

The amount of funds you should look at holding in an emergency fund is 3-6 months’ worth of living expenses. This amount can be determined by your needs and circumstances.

Some people may need to save more than 6 months’ worth of expenses.

Ideally, start by listing all your expenses then prioritise and adjust expenses so that your income exceeds them.

You should try to save at least 20% of your income. As cliché as it is, every little penny really does add up; especially when it’s paired with compound interest (interest earn from interest.)

You should spend what is left after saving, not save what is left after spending.

These loans collect many of your debts into one loan payment. This simplifies how many payments you have to make. These offers also might be for lower interest rates than you are currently paying.

Tags: , , , , , , , , , , , , , , , , , ,