If 2020 has taught us anything, it’s that you should always have a back-up plan – just in case things go…awry.
We’ve witnessed the global catastrophe where many have lost their jobs due to the coronavirus. Millions of South Africans have lost an income during the last few months – and those who still have jobs have had to endure their salaries being minimised. With a reduced or no salary, people have had to resort to finding alternatives means to “get by”. So, what are some of the financial lessons 2020 has taught us?
Lesson 1: Live within your means
With minimised to no salary, South Africans had to evaluate and determine what was important. While cutting down costs seems like an excruciating challenge, knowing the differences between your needs and wants – especially when it comes to your budget – is helpful when it comes to your financial goals.
Sit down and investigate, evaluate, and inspect your monthly bank statements. If you’re not big on paper, there are helpful apps that automatically calculate the percentage you’re spending on food, entertainment, essentials, etc. The next part is challenging but necessary. It’s not just about cutting down on things you don’t need but “downgrading” on a lifestyle you may have lived before.
Lesson 2: Saving for a rainy day
No one should ever doubt the importance of having a “rainy day” account. With most people losing their jobs or relying on payment benefits from the government, many have dipped into their savings as a relief.
It’s never too late to start saving but, how much should you be saving? The rule of thumb is that at least 20% of your income should be saved. If the number sends you into an immediate panic, don’t worry. Over the years, people have developed various saving strategies that don’t leave them starving at the end of each month. One solution is looking at your expenses each month and using that number as a savings goal. Whether you are creating a rainy day account for 3-12 months is up to you.
Lesson 3: Having a passive income
It’s no secret that in South Africa, having a single income is not viable. The cost of living in the country is quite high and even if you and a partner are bringing in a stable income – having a passive income could financially benefit you both.
Your passive income could be anything from freelancing to investments. Research to find out what you are interested in and find a way to monetise it. With all the energy and passion, you could turn your passive income into something full-time.
Lesson 4: Job security is rare
Unfortunately, many South Africans learned this lesson the hard way. No company or industry was immune to the global pandemic. Companies with longstanding history succumbed financially and had to let go of employees to survive every month. These heartbreaking revelations have taught us that job security is not always stable and that a back-up plan is always important.
Lesson 5: Take care of your future
These last few months have not only had us thinking about the present but also had us pondering about our futures – financially and emotionally. What kind of legacy would we like to leave behind? Our dreams? Career? These financial lessons have also taught is that stability is rare – job and emotionally – and that it is truly up to us to create our unique path.
If you have been wondering about financial freedom, then now is the time to act on it. With the right guidance, you’re able to build a financial legacy for you and your family – building the life of your dreams. Are you ready?