As South Africa increasingly feels the economic impact of the national lockdown due to COVID-19, it is now more important than ever to work smart with your money and find ways to curb spending. It is also wise to investigate the measures that financial institutions have put in place to help ease the financial burden on South African citizens.
Work with a plan
- Know your credit score
According to nichemarket.co.za your credit score provides a comprehensive record of your financial history, along with detailed information on your borrowing and spending habits, payment trends and contact details. This credit score or report provides an indication to financial institutions of whether you are financially sound and can afford instalments. There are many services available online to help you access your credit score, including Clear Score, Go Credit Reports and My Credit Check. You are entitled to one free credit report per year. A score of 650 and higher indicates minimum risks for credit providers, while a score of 580 and lower is considered a high risk.
- Know your net worth
Even if your bank account reflects a positive balance, your net worth may be negative. Some banks provide your net worth on your online banking profile, based on the portfolio you hold with the bank. Your net worth represents your assets (savings etc.) less your liabilities (credit card balances, overdraft facilities, loans etc.). Remember that your net worth according to your banking profile will not include any assets and liabilities held at other institutions, for example, a clothing store account, car financing or retirement savings.
- Know your spending habits
Review your spending for the last few months. Work through your bank statements and make a list of how much you have spent on different items such as household expenses, transport, loans and accounts, food and beverages. Ask yourself the following:
- How much did I spend on necessities or needs, and how much on wants?
- In retrospect, what would I consider money wasted?
- Did I buy anything on credit that could have waited until I’ve saved up the amount to buy it cash?
- What do my savings look like in relation to my spending?
- Know where you’re going
Set two to three realistic financial goals and write them down to help you remain focused.
- Create a monthly budget based on your past income and expenses. The objective of having an effective budget is to monitor that you don’t spend more than you earn.
- If your expenses exceed your income, identify the non-essential items that you can control, like entertainment and beverages, and cut back on these.
- Keep track of your expenses on a weekly basis to make sure you do not overspend.
- Review your budget every month to make sure it is still a realistic representation of your financial situation.
- Remember to budget for unplanned events that may put you under financial pressure. Open an account for emergencies and deposit a fixed amount into this account monthly for such events.
- Avoid debt as far as possible. Compare your total debt repayment instalments to your income and calculate whether it is affordable. Negotiate better rates with your financial institution at the shortest lending period possible.
- Avoid impulse buying – keep your financial goals in mind and make sure to plan your shopping trips and online purchases carefully.
- Don’t cut back on the so-called grudge expenses such as your medical aid, insurance and retirement savings. These are crucial to survive unforeseen events such as the COVID-19 crisis.
Save on medical expenses
Unplanned medical expenses can have a devastating effect on your carefully planned and managed budget. Here are some tips to prevent this from happening:
- Ask your doctors or specialists how much they will charge for their services when you make an appointment and find out what portion your medical aid will cover.
- Negotiate a discounted rate when making an appointment.
- Use generic medicine where possible – your pharmacist will advise you – to limit co-payments.
- Make use of pharmacies that offer loyalty programmes and discounted rates for frequent spending when buying supplements.
- Before you receive any treatment, first consult your GP, who will refer you to the appropriate clinical discipline specialist.
- If your GP refers you to a specialist, enquire whether the specialist is part of your medical aid’s network of specialists in order to avoid co-payments.
- Find out whether your medical plan covers the procedure you have to undergo, and remember to get pre-authorisation by visiting the Member Zone or phoning 086 0200 678.
- Build a relationship with one doctor who knows your history. If you have to consult a doctor specialising in a different field or you need a second opinion, request that your previous test results are made available so you won’t have to re-do the tests. You can find your complete health record on HealthPrint, Medihelp’s free online wellness programme.
- Consider medical gap cover, an insurance product that helps you pay for medical expenses not fully covered by your medical aid option. Ask your medical aid adviser for advice on different gap cover options and the best solution for your needs.