Johannesburg- Working in human capital (human resources), I interact and engage with an array of people every day.
During the Covid-19 pandemic, I have seen some challenges that are universal to everyone, no matter their position.
I have seen increasing numbers of employees asking for salary advances or selling their vacation leave to make important payments like school fees.
Everyone must build in a buffer or accessible savings for times of need. But it can be difficult to re-evaluate what you need to do when you’re in a crisis.
Consider these four steps to show you where to start to re-examine your finances and secure a better financial future:
• Have a ‘buffer’ goal in place
It is much easier to save if you’re saving for something specific. If you have something definite you are working towards, it will be rewarding each time you add a little to your savings and move closer to realising it.
• Define your essential expenses
Start by looking at your income, and then define your essential expenses – the hard costs that you absolutely have to meet every month (for example, rent or a bond repayment). Put together a budget based on your income that will cover and manage your essential expenses.
• Re-evaluate your retirement contributions
Once you have your essentials-only budget in place, evaluate your retirement contributions. I cannot stress enough that these contributions are critically important and must be in place, even if you’re only contributing the minimum amount to your retirement savings each month.
• What to do with your buffer, now that you have it
Once you have that buffer in place – even if it’s not very big initially – you should think carefully about where you will keep it. Think about whether you want it in an easy-to-access savings account (which usually has a lower interest rate), or a longer-term
investment offering that will likely earn more interest and grow your money more over time.
By Desiré Pauw.
• Pauw is a divisional executive for human capital at Momentum Investments
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