Could You Financially Handle An Emergency?

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We All Used Our Savings To Survive

Few South Africans save money. This has been the case for a really long time but has been made even more of a problem during the Pandemic. Over the last 2 years, consumers have had to use all their smarts and resources to stay afloat during the Lockdowns. For some, this meant getting deeper into debt and maxing out their credit. For others, this has meant spending their modest savings as they tried to get through some of the hardest months of the Pandemic.

Many consumers have now found that the “cupboard” has run dry and if something unplanned comes along now they have nowhere left to look for more funds.

Could You Survive A Sudden Financial Emergency?

If one of your tires burst or you needed to pay an excess on an insurance claim, Could you manage?

If you suddenly had to run to the dentist (you know how medical cover like to exclude dentists), Could you find the funds?

When times are tight it is almost always impossible to save funds. In many cases, the math actually works out better if you pay off your debts than set money aside. This is because the interest you get on savings accounts is normally much smaller than the interest charged on credit cards and loans. This means it is wise to pay off debt to save money over the long term.

If however, you are in the position where you cannot make use of credit anymore (eg. if in debt review or if you have maxed out your credit accounts and the banks have started to force you to reduce overdrafts etc) then you may find it beneficial to have a small savings account separate from where you bank for credit. Some banks (especially the new online ones) do not charge you monthly fees for accounts if you seldom use them.

Because you probably need every cent to get by, you may feel it is not worth opening a savings account to only put R50 in. But if you manage to put in R50 for 6 months then you will have R300 sitting waiting. With this small amount sitting one side, you may find that your mindset changes. You may find that suddenly you can squeeze out another R50 a month. This means after 12 months you will now have R900 saved. 

‘The idea is to start the process. It can help you shift focus from ‘just getting by’ to saving’

Once again that seems like a small amount and any emergency you run into will likely be more than that. The idea is to start the process. It can help you shift focus from ‘just getting by‘ to saving. And who knows? Maybe you will find that you can start to skip that chocolate in the Pick n Pay queue and that KFC meal during lunchtime and rather put those funds into the savings account too. If you are able to begin to focus on your savings then you will soon have a reasonable savings amount set aside for when the kettle dies or the dog suddenly needs to visit the vet.

Sometimes You Need Help

If you are struggling to pay off your debts then you should consider getting professional help (eg. from a Debt Counsellor). Dealing with a mountain of debt can be stressful and negatively impact your health and relationships. Like savings, it is better to start dealing with debt now rather than later. The sooner that you start to chip away at your debt, in a significant way, the better. Having someone who knows the ins and outs of credit use and the legal system and options you have to pay off debt in a more affordable way can make all the difference. So, consider getting help.