Sit tight – how to prepare yourself and your money for 2021

South Africans are going to need all our financial skills and smarts to navigate the challenges of 2021. We’ve got the tips and advice you need to plan for and manage whatever this year has in store for you.

 The situation: You don’t have job certainty

This is a reality too many South Africans are facing. Due to COVID-19 restrictions on certain sectors, reduced demand as a result of low economic growth, or because companies are eager to cut costs, jobs are not secure.

Tips to help you manage

  • Update your CV – it should always be ready, in case you need it
  • Keep an eye on opportunities in the job market so you know what positions are available, what they pay and what skills are required
  • Network – build your contacts, keep in contact and use sites like LinkedIn
  • Take online courses that interest you, expand your career options and improve your knowledge – for example, learn a new language, or try computer coding
  • Look for part-time or after-hours income earning opportunities and diversify your income, so you are not 100% reliant on your job
  • Spend less, even while you are earning – cut your costs and save as much as you can so that you have a buffer if you lose your job, or your income is reduced

The situation: Your income is reduced

As a result of COVID-19 and lockdown, many people are facing reduced working hours, a temporary layoff, or a salary cut. This could affect you or another income earner in your household, resulting in a lower total household income.

Tips to help you manage

  • Ask your employer if they know whether the salary cut is temporary or permanent, so you know what to plan for in the months ahead. If they don’t know it’s best to plan for a permanent cut
  • Check if any benefits are affected, such as travel or food allowances, or pension fund and medical aid contributions, as these will need to be paid from your own funds
  • Find out if you qualify for any government assistance, such as the Temporary Employee Relief Scheme (TERS) benefit through UIF (your employer will register for this and can tell you if you qualify for benefits)
  • Look for alternative sources of income such as a part-time job, selling your skills or products online or in person, or setting up your own business
  • Cut your expenses before going into debt, and consider downsizing or sharing big expenses like a home
  • Talk to your creditors about reducing debt repayments
  • Use your savings, like your emergency fund, to top up your budget for living expenses

The situation: You are retrenched

Over 600 000 people lost their jobs in South Africa between September 2019 and September 2020. Sadly, we are likely to see more job losses and retrenchments in 2021.

Tips to help you manage

  • Find out if you are entitled to a retrenchment package or other benefits
  • Find out if you can withdraw some or all of your pension or provident fund in cash. You can use this for living expenses if your retrenchment package runs out, or keep it as an emergency fund for unexpected expenses
  • Register for UIF
  • Revise your budget and cut costs if you need to
  • Find out if you have credit life cover that will cover some or all of your debt repayments
  • Update your CV, register on jobs sites and keep networking so you can find and apply for new jobs
  • Consider part-time work opportunities or set up your own business

Don’t ignore…

Your budget
Take a few hours to go through your budget each month, so you know what your income and expenses are, and how they change. It will also help you see where you might cut costs.

Your insurance
If you have an asset, such as a home or car, that you cannot do without – insure it. Similarly, keep up your life insurance – it will help your family manage financially if you are no longer around. Always try and keep your insurance, pay your premiums, and look for ways to reduce premiums before cancelling your policies. Your insurance gives you much needed security in these uncertain times.

Your investments and retirement savings
Be realistic about these – save if you can, but don’t prioritise saving if it means you are doing without essentials like transport, food and education.

Your will
Draw up a will to make sure your family and loved ones inherit according to your wishes. Dying without a will means your loved ones may not inherit as you would have wanted.

Financial fitness is a journey

Most of us will, at some point in our lives, face a financial challenge – and we are living in challenging times. If you work towards making smart financial decisions, find new ways to earn income and spend well within your income, you will become a better personal financial manager, capable of making it through the tough times.

Share post