If you want to go with the flow, live in the moment, wind in your hair kind of life, you need a forward thinking prepared for anything kind of plan.
The news is out – South Africa is in a technical recession meaning you could be getting a lot less bang for your buck! Yikes!
It has been increasingly harder to make ends meet.
Here are some ways in which you can make sure that you don’t feel the pinch of the recession too much.
Pay off lagging debt
Try to pay up any debt such as loans or store accounts, this will ensure that you have cash freed up each month. Put this extra cash in a savings pocket rather. So that when you want to buy anything, you can do it cash and not buy on credit.
Paying interest and fees is the most unproductive spending we do! Imagine how much easier it would be to cope with price pressures if you didn’t have those loan repayments each month.
So even as we feel the squeeze, make a determined effort to put a bit extra into those debt repayments each month. And please don’t touch the credit card (unless it is pre-paid)!
Build an Emergency Fund
You’ve heard this before. But to be prepared for recession or for unexpected expenses, you should maintain an emergency fund.
Why should you have an emergency fund, rather than just getting out of debt? Getting out of debt first does make the most financial sense. But there has been some research that suggests that building up an emergency fund, makes it easier to get off that debt train.
When you do use your emergency funds, only for true emergencies. Replace them as soon as possible so the account will have time to build back up before you may need it again.
Reduce your spending
To do this, you first need to know where all your money goes. Start by listing all your expenses that means everything you spend your money on. Create a monthly budget, this helps you see how you are spending your money. With a budget you can pinpoint spending problems and identify your spending habits.
So the time has now arrived when we need to be honest about how much we are really spending, and start enforcing the budget.