As consumers continue to quantify the impact of COVID-19 on their finances, some financial mistakes can be avoided in these unprecedented times.
Dhashni Naidoo, FNB Consumer Education Programme Manager says, “Consumers should do everything in their control to keep their financial affairs in order through this difficult time and the uncertainty it brings. One cannot predict how long it will take for the situation to stabilise and the knock-on effect on the economy. The idea is to adopt a disciplined way in managing your money and seek financial relief where necessary and possible.”
Naidoo shares 5 things consumers should avoid in these tough times;
Don’t cancel your insurance – Insurance should not be used as a mechanism to free up cash. Once a policy lapses or you cancel it, you expose yourself and your family to greater risk. It may also result in higher premiums when you take up insurance again in the future or you may be excluded from certain benefits. If necessary, rather contact your insurance provider to see if you can reduce your premiums, as opposed to not paying or cancelling your policy.
Don’t take up unnecessary debt – Where possible, you should avoid using credit to cover your living costs. Remember, the debt remains after this situation has passed and you will be obliged to pay this back. Rather look at how you can reduce your expenditure on non-essential items.
Don’t be too quick to make a big financial decision – We find ourselves in unprecedented times and we are uncertain of what the future might hold. During this period, we should exercise extreme caution in our spending habits and be realistic and even conservative about what we can afford. Before making any big financial decisions, you should determine if you will be able to sustain this should there be any changes to your income.
Avoid seeking financial advice from family and friends – Don’t rely on your friends and family for financial advice. Consumers are urged to rather approach their bank, insurance provider, credit provider or financial advisors to get proper financial guidance in relation to their financial matters as well as to be helped in navigating and managing their financial affairs effectively.
Don’t spend money that you don’t have – Cut back on luxury items and unnecessary expenses. Save where ever possible and use your loyalty reward programmes for relief.
“It’s important to exercise caution in your financial decision making, be conservative in planning for the future and extra careful in how you spend. Furthermore, if your finances have been affected by COVID-19, consider the measures that your bank may have in place, including your credit life insurance that may cover some of your debts on qualifying claims,” concludes Naidoo.