Plan your safety net in a recession

In this week’s blog, we would like to take a look into the latest concerning issue: the feared recession and the effect on ordinary people, their families and money matters. How can one survive the recession and what can be done to survive the real fears and effects of a recession?

By now we all know that we are in a two-year low of the recession, which is getting worse and affecting all markets in our economy. This has a direct effect on the man in the street’s pocket. Food prices are on the increase; as well as services like electricity and fuel. For example, in July we had an interest rate cut off 25 basis points, what can we make of it: good or bad? The good part for consumers that love spending their hard-earned money on stuff is what the interest rate cut hopes to achieve. The economy promotes spending and an opportunity to open new accounts on credit at lower interest rates for those who want to enter the credit market, which is not a good option for anyone in a recession and must be well thought through. When understanding that at some point sooner than later in our struggling economy the interest rates has to increase to promote growth. We have not received the full blow of the recession yet; the true effect will hit us when we expect it the least.

What can when we at Consumer Debt Support (CDS) do that can help to ensure the individual and family survive the recession by education and putting guidelines into place that can help with planning before the recession gets much worse with a negative over-spill when planning is not done to buffer the effect of the recession.

Here at CDS we looked at some ideas (tips) and ways of how we can implement survival skills to ensure financial survival. Let us take a look at what can be done to adjust the lifestyle and financial ways that will help relieve the effects of the recession.

One:  When we ignore saving money for emergencies, it should be the FIRST place to start. Set yourself achievable goals with your current income, and start saving, and keep to the goal and stay in the routine of saving. It is your money you putting away for when you need that money most. Do a budget and see where you can cut on expenses and put the balance into your savings account. Open an account away from your day to day account. When you stick to the program and habit of saving, this emergency fund could be enough to cover three to six months of your monthly expenses when you need it most sometime down the line.

Two: The debt thing. Pay off debt. What plan do you have in place to pay off your debts? Would you like to become debt free and rather save the money you are paying on debt towards your retirement, or in your investment account for later in life? If you have not saved money to cover at least three months of your debt repayments, you are heading into trouble when you lose your job in a recession economy. You are most likely over-indebted and need to see a registered debt counsellor that can help you with a tailored payment plan that suits your pocket to get rid of your debt and prevent you from making more debt until all your debt is fully paid up. http://www.debtcentre.co.za/contact-us/ – our debt management specialist will make contact with you. Understanding that the sooner you start putting money away for the what if’s, the easier it will be to deal with any bad financial situation you could be faced within a recession.

Three: It is always a great idea to create additional income. How often we hear people say: “But I don’t have any way of making an extra income.” Creating extra income can become a great space to be in for when you lose your job in a recession.  When you are well-adjusted in your own business or second job, it will help with the loss of the primary income. With a second job, the money can be saved in the money market; invested into a savings account where you can place 20% of the money saved into a special emergency account and see the other money grow for your retirement one day. Like now we are facing a serious recession that has just started showing its ugly face, we have no idea what to expect. Knowing the plans put into place, is relieving helping you to deal with a difficult financial challenge a little better as you made provision in the event of job loss of possible retrenchments. Plan ahead and remember you not doing this for anyone else, but only yourself.

Four: Have regular family meetings and talk the situation over. Go into your finances and go over the feasibility with the immediate family of what can be done and what can no longer be covered due to the recession. It would be safe to say that family or the individual living alone must cut on their basic living expenses to survive.  A recession is a good time and space to set an example for the children and show them how to deal with a difficult situation. Everyone should know they have a part to play in the recession that has spilled over into your home as well and understand what is expected to help relieving the financial stress to those bringing the money into the home.

Five: Cut expenses. Ask yourself, How can I survive the recession by cutting expenses? Well, every rand you save, will help you to put the safety mats into place, which becomes a vital part in surviving a recession. Stop buying clothes and make do with what you have; don’t buy anything on credit or open new accounts. Introduce a car pool in your area to drive to work together. This way the cost of fuel can be shared. Ignored advertisements of items being sold on discount that is not food stuff; don’t buy anything you do not really need for your day to day survival. If your rent is too expensive, consider moving to a cheaper area where it is more affordable for your pocket. Cut the trips to the restaurants and make food at home — it is healthier and you can control the budget for lunch or supper. Shop around for good shopping deals at your grocer and your fresh food markets. Buy bulk and look for the value veggie packs. You CAN survive the recession.

Six: Take extra care of your job. Staying employed is so important to you and your family. Here are some tips that can help you change your focus at work: Stay focused at work; be at work every day; get to work early and be on time; show your willingness to assist with challenges and helping out; stay noticed by your management team. In time of recession, you do not want to be on the shortlist of retrenchments that your job could be made redundant. If you see your boss can save money in his business, share the prospects with management. It shows that you serious about your work and have initiative. Build your safety net by saving money and stay employed. You need the income to save for your rainy day.

Seven: Buy the essential — nothing extra — ; planning meals; make an appointment with a dietitian to assess just how much meat you and your family each should be allowed per serving to cut down costs in expensive cuts of meats. Don’t buy luxury food stuff. Stick to the basics. Save on electricity. We at CDS have done a comparison on what electricity cost us in 2015 – R600.00 worth got us 511 units.  Now, July 2017, R600.00 got us 311 units and our free units were taken away. When you are not at home during the day, and when you go to bed, switch off the geyser. These are just some of the things that eat your money.

Eight: Enjoy living while we are alive and able to work and enjoy the nice things life can offer us and our loved ones. It can cause anxiousness and paranoia when we don’t have any alternatives in difficult financial times. Plan now while you are able to do so.  It will empower you when the effect of the recession may come your way. Laugh and plan your day to day. Investing in the extra job that can help you to save for a rainy day. Don’t allow the fears of the unknown to rob your fun from you. You can make a difference for when you need it most. What you must do, is keep on doing what you are doing and adapt to the new changes you put to yourself; and invest into your own future and secure your happiness going forward. Money is a great benefit when you need it most. Don’t allow your own fears to rob you from developing your own worth and build your second job and create financial freedom.

Nine: Income protector with disability and retrenchment insurance cover: It is always a good idea to have credit life insurance in case of death with which will give you peace of mind that all the debt will be settled.

Ten: What can you do for extra income? Here are some ideas

  1. Look into the recycling business.
  2. Look into bulk fruit for resale.
  3. Welding or other skills you can do from home.
  4. Refurbish furniture for clients.
  5. Potted plants for resale.
  6. Sell braai wood.
  7. Do printing for customers.
  8. Do a spit braai weekends.
  9. Plan kiddy’s birthday parties.
  10. Sell skincare products from home.

In conclusion: Looking at the negative effects of a recession, we can sit back and become depressed; possibly lose our jobs; and mope about the situation. We have the power to change our immediate situation. Start with the little things by cutting on day to day expenses and save that money. We can survive the recession — it is within our power to change how the recession will affect our lives.