How to Survive the Coronavirus Financial Crisis in South Africa with Ean Bernard

How to Survive the Coronavirus Financial Crisis in South Africa with Ean Bernard

Siphelele Shezi


With the Coronavirus pandemic taking its toll on the health and safety of the world, it’s also causing notable shifts in the economy and livelihoods of many. Many of you have probably realised that as much as this is a health emergency, it’s also a financial one. It raises a very important question for many of us:

From a financial point of view, what should you be doing during this pandemic?

In this article, we're starting off some important things we think South Africans need to know right now. We'll also be updating this article with tips and action plans so that South African citizens can beat the COVID19 breakout.

Valuable Insights From South African Companies

South African legal firm, Bowmans, recently released a powerful report detailing the Economic impact of COVID19 on Eastern and South Africa. If you would like to read those reports, you can get the two versions here:

  1. Summarised Version
  2. The Full Version

Where are we right now in South Africa?

Firstly, looking at the South African economy, there are many challenges ahead, similar to what we are seeing on a global level. While the world may be following a universal downward trend as a result of the virus, South Africa faces its own unique challenges as well.

With the corona virus lockdown in place, most major businesses and industries will be dramatically affected. It will have an influence on every consumer, no matter their income-bracket or demographic. This is happening to a country with alarming rates of unemployment and very low investment grades.

However, it’s not all doom-and-gloom, as the country’s ‘essential services’ will be operational as usual. so, while there will be some disruptions, the crucial operations of the economy will remain active. South Africa has shown that it fight against all ods when the push is at its worse. That means you, as an individual can make it through this extremely challenging time.

Let's take a look at how you can tackle the time ahead, from survival to "surthrival".

Financial Relief During Coronavirus: What You Need to Know

If you have to take time off work because of coronavirus, there are a number of support measures in place. The government has confirmed that the UIF system may be used to help workers whose companies cannot afford to pay them, and a Solidarity fund has been set up; which you can find out more about on the government’s website.

A tax subsidy of up to R500 per month for the next four months will be provided to private sector employees earning less than R6,500 per month.

Regarding traditional cash access channels, ATMs, retail point of sale devices, Post Offices and cash pay points will remain open.

How Can I Budget During the Lockdown?

For those whose work has been affected or stopped altogether, there are some things that you can do in order to make this period easier to manage. While it may be difficult for some, if you have any cash or money currently available, you need to make the best use of it in order to compensate for the drop in income.

Look at what you’re spending and what income you have coming in for the coming weeks and months. You may need to cut back on as much as possible in order to remain comfortable during this period. Consider only necessities, and look to cut costs on things like airtime and data purchases, unnecessary activity costs, and keeping your utility bill at home as low as possible.

The government has assured South Africans that stores will be restocked as per normal, so there’s no need to panic buy or spend excess money on things you actually don’t need. Make a shopping list and stick to it – don’t let fear rule your wallet, and keep this in mind if and when you do go to the shops.

Do you have a savings account? This may be a reasonable time to contact your bank and find out about your terms and notice on your savings account. If you can access this money without a notable waiting period and no penalties from your bank, this could help provide you some comfort and help cover costs during the lockdown. Rather than creating debt, utilising these small savings is the better option during a crisis situation.

Tip: You can also use this time to think about longer-term savings and creating a Budget Plan to help you transition to and from this stage.

Do you have an insurance policy?

If you have any insurance policies, get in touch with your insurance company to see if you have any compensation for loss of income, unemployment, or sickness-related complications. Some of these may have long payout terms, but it is worth discussing with your insurer to see if you have any options available.

I Owe Money That I May Not Be Able to Repay During this Time. What Do I Do?

Covering rent or a larger expense during this shutdown period is going to be difficult for many. Understandably, the best thing to do is to communicate with your lender, landlord, or bank who you may owe money to. The sooner you do this, the better, as they will likely discuss options with you regarding repayments or a payment plan.

Debt counseling is also an option to pursue if you’d like further information on how to create a money-management plan and manage the repayments to those who you owe. 

I Need to Borrow Money

If you don’t have any savings and are facing an emergency cash shortfall, borrowing may feel like your only option. Try to use borrowing as a last resort and if you need to borrow, make sure you choose the right type of credit or loan for your situation. Avoid loan sharks and unscrupulous lenders, otherwise, you could find yourself paying more than you need to.

If you’re able to borrow some money from family or friends who can lend you the extra cash, this could be a cheap way of getting extra money without resorting to Payday lenders or other types of high-cost credit. They are also likely to be more flexible about how you pay the money back.

Whichever way you borrow money, ensure that you have an agreement in place though, as this will help minimise misunderstandings and clarify repayment terms.

Can this Be an Opportunity for Me to Make Money?

While the outbreak of the virus is universally negative and may deter many from earning potential, it also is an opportunity to save.

If you’re still receiving your salary but unable to work, try to utilise it as effectively as possible. Implement the budget tips we mentioned above by cutting all non-essential costs, keep spending on food and groceries to a minimum, and exercise restraint.

With travel costs and extra-curricular activities now at a minimum with affected businesses being in lockdown, use it as an opportunity to save those funds.

If you have the means, there may be additional work income during this period. If you have internet access, look for remote work opportunities, such as data capturing, administration assistance or online teaching. These side hustles can help provide you with extra work and cash during this period.

Tip: With the repo rate dropped by a full 1% it means you will save money on your home and vehicle loans. Use these monthly savings to:

  1. pay back higher interest loan accounts,
  2. or boosting your investments/savings
  3. pay the same amount as usual into your home and vehicle loans so you pay them off sooner.

Is There a Way That I Can Help Others?

While the pandemic is an unpleasant experience, we’re all in it together. If you have additional funds or surplus cash and want to help others, consider loaning to close family and friends. As per the above, keep a formal loan agreement in place, though, and don’t lend any money that you may need, i.e. only lend money that you can guarantee that you won’t need.

Look out for government funds where you can contribute to help other survive the financial consequences of corona virus economic lockdown. It's also important to reach out to your community, most relgious institutions and other groups will have plans in place to support the poor and needy.

Conclusion

Remember to practice being frugal and monitoring your expenses during this period, and utilise the resources you have available to make the best decision for the coming months. Do not overbuy or let fear dictate your financial decisions.