The origin of the term “spring-cleaning” is often debated, with some attributing it to a Scottish tradition carried out on New Years’ Day and others tying it to the Jewish tradition of thoroughly cleaning the home ahead of Passover. In South Africa, spring starts in September (except in Cape Town where it takes a laidback approach and arrives sometime around late October). While we are not quite in the New Year and nowhere near Passover, spring could still be an ideal time to spring-clean your finances, if not your house.
A recent survey by Debt Rescue found that 85% of South African respondents needed help either financially, emotionally or both because of the Covid-19 pandemic. A further 55% required financial help but had no access to credit. Sadly, 45% of respondents said they’d been affected by either retrenchment, temporary layoffs or salary reductions, with many of them resorting to measures like digging into their savings, relying on credit and applying for payment holidays.
“The aftermath of Covid-19 has dealt consumers with a major financial blow. Keeping budgets in check has become more important than ever,” says Susan Steward of Budget Insurance. “Whether you are still coping, or staring a full-blown crisis in the face, there are quite a few practical things that you can do to spring clean your budget and streamline it to save anything from a couple of hundred to thousands of rands.”
Steward outlined the following tips:
- Make some changes behind the wheel
While you can’t change the price of petrol, changes to your driving behaviour can help stretch your tank a bit further. For example, driving at 110km/h uses up to 25% more fuel than you would cruising at a more moderate 90km/h. Other good driving behaviours that can improve your fuel economy include avoiding harsh braking and acceleration, and regular vehicle maintenance checks.
- Update your insurance
If you have not done so already this year, now is a good time to check that your home contents insurance is up-to-date. If you have bought new items for your home, the amount you’re currently insured for may not be sufficient and you could be underinsured. On the flipside, some items may have devalued, you may have sold items or downsized and may want to reduce your home contents cover, which could save you a substantial amount of money.
- Delete unnecessary and outdated fees
Go through your bank statement with a fine tooth comb and follow up on all the debit orders. If you are unlikely to make use of your gym membership, find out what it will cost you to cancel it. Check that you are still using an appropriate bank account for your needs and that you are not spending unnecessarily on bank fees. A moderate gym fee of R250 a month that gets cancelled will add up to R3 000 after a year.
Floris Slabbert, national sales Manager at Ecsponent Financial Services says that many people lack the structure and control to keep their financial records organised and secure. She shares three simple steps to spring clean and refresh your financial records and kick-start a plan to improve your future financial situation.
1. Get your organisation system in order
Decide on an organisation method that works best for you and stick with it. One way is to organise regular bills and financial statements by month or by account. For bank statements, aim to keep six months’ statements on hand. This will make budgeting and prioritising bills a little easier, and has the added benefit of reducing your stress levels when tax season arrives
2. Knowledge is power
Your credit score influences whether you qualify for credit, the interest rates you will be offered and, in some cases, even your insurance premiums. Monitor your credit record and find out what your credit score is. This will give you more confidence when you’re negotiating interest rates with that pesky banker and monitoring your credit record will help you identify instances of fraud or identity theft quite quickly.
3. Decide to deal with your debt
Working out a payment plan to sort out your debt can seem daunting, but it doesn’t have to be:
- Identify the amount of debt you owe each credit provider and the interest rates you are being charged.
- Pay off the debt with the highest interest rates first.
- Be realistic in your budgeting and cut back on unnecessary expenses.
As level one of the lockdown leaves the country feeling like it has found a “new normal”, there has never been a better time to review your financial health with some spring cleaning tricks.