Financial First Aid Kit

Budget

Without knowing what your income and expenses are, you will be grasping in the dark when planning. Draw up a basic budget sheet and start out by knowing what your monthly financial commitments are.

Financial Advice

If you are unsure about where to cut, or how, speak to your financial advisor, or contact one if you don’t have someone already. There are people standing by to guide and help you.

You can also ask our consultants for advice on approaching banks and financial service providers to restructure payments and installments to suit your immediate needs. However, also remember to ask about the medium-to-long-term implications of these changes when the lockdown is over before you decide what to do.

Communication

Communicating with banks, lenders, landlords, and financial service providers is crucial right now. Don’t postpone these conversations. As soon as you know what needs to be shifted or renegotiated, speak to them and ask for debt relief while you are still in good standing. Under normal circumstances, these might be uncomfortable conversations, but the scale of this outbreak is affecting billions around the globe – you are not alone! There is no shame in having to ask. We attach a sample letter for you to adapt according to your needs.

Rental Agreements

Homeowners can apply to their banks for payment holidays on their home loans, but tenants can also temporarily renegotiate rental agreements. For example: if you’re unable to pay the full rental amount, you could agree with your landlord to use some of your deposit to make up

the shortfall. You will need to reinstate the deposit over an agreed timeframe, however, as the landlord uses this to pay for damages and you don’t want to be liable for those when the lease agreement eventually ends. But this is a good way to create some cash flow in the short term.

Alternatively, if you are in good standing with your landlord and have a history of paying on time, you could negotiate a rental deferment. This means paying a lower rental amount, or no rent at all, during the time that your income is affected. However, here too, you need to agree on terms to repay the balance in the future.

Insurance Cover

Insurance coverage can be anything from car and home insurance to life insurance and medical aid. It is never a good idea to cancel insurance altogether, as it protects you against unforeseen circumstances that could be financially crippling. However, if your income is affected, there may be a way to reduce your monthly premiums in the short term. Speak to your insurance providers and explore options that won’t leave you at undue risk. You could also consult your broker to make sure that you know the right questions to ask.

Fine Print

Read the fine print with attention before making any decisions. Look at the provisions of each agreement that you are renegotiating to make sure you understand what you are signing up for, and what to expect over time. Don’t go for temporary relief at all costs. Chopping and changing insurance coverage, for example, or stopping premiums altogether, might bring immediate relief, but there will be implications down the line. A financial advisor will be able to help you if you’re unsure.

Credit Record

Not making regular monthly payments will affect your credit score. Limit this impact by remembering the following:

Do not simply stop making payments and assume it will be in order because so many other people will be unable to pay at present – you have to make a formal arrangement.

Rather pay something instead of nothing. Try to meet as many of your regular financial commitments as possible and don’t cut completely. Talk to a financial advisor or be guided by your individual circumstances and what you consider to be essentials. This is different for everyone.

Whatever you agree with your creditors and lenders, it must be recorded and submitted to the credit bureaux. Once you catch up on payments, the credit bureaux must be informed again, so that your good standing can be reinstated.

Information is Key

Arm yourself with the best-quality information you can find. Speak to a financial advisor or find information from reputable online sources to clarify the important points. You could also listen to podcasts or webinars, but here too, make sure you get them from reputable sources and take care to avoid fake news and false information.

Speak to us if you are unsure about anything. We are here to help!