One can never be ready or fully prepared for a crises, hence they are usually tricky to handle at the time considering that they are unpredictable in nature. However, being in control of the things you can, will put you in a better position to deal with uncertainty.
Financial institutions have announced a payment holiday due to the corona virus pandemic. The question is, what does it actually mean for you and your finances? Do you need it and how will it impact you going forward? Read on to find out.
DirectAxis, a financial services provider suggests four ways in which you can constructively use this ‘Lockdown’ spare time, to better manage your money.
Improve your credit score
Your credit score is the way the financial world sees you. It’s not about how much money you have in the bank or how much you earn, but how financially responsible you are.
Benefits of improving your score is that you can get credit if you need it – an important consideration in uncertain times – and it could save you money. People with higher credit scores are regarded as less of a risk and can be considered for better rates on loans, insurance premiums and rentals.
Review your budget
Some of the assumptions you made at the beginning of the year may no longer be true. For example, you might not be able to count on the salary increase you were expecting. Working from home could mean you’re saving on transport costs, but that your water, data and electricity bills are higher. You may also have to account for that Netflix subscription you’ve just taken out.
Getting a clear picture of how you’re spending money puts you in control. It also allows you to determine where you might be able to make some savings and perhaps put a little money aside in an emergency fund.
Pay your debts on time
Although the economic impact of the Covid-19 crisis isn’t yet known, it will be substantial.
Banks have been working with the South African Banking Association to find ways of helping customers meet their obligations, so check your financial services provider’s website and social media pages for updates.
But remember, skipping monthly payments now in the hope that there will be some sort of future leniency is a very bad idea. It will negatively affect your credit score and will put you in breach of your contract with the lender.
Even if a payment holiday is introduced, it is likely consumers will have to apply to be considered. Missing payments before the concession is implemented could make you ineligible.
Improve your financial literacy
The better informed you are the more likely it is that you’ll make good financial decisions. Although the world is facing an unprecedented crisis, the fundamentals underpinning sound money management haven’t changed.