Financial wellbeing in the time of Covid

Head of wealth at Emperor Asset Management, Craig Turton, recently spoke at a meeting of the South African Depression and Anxiety Group (SADAG) about the effects of financial stress. He gave the group some high-level tips on how to reduce the stress that finances can put on your mind and body. Here’s a summary of his talk:

Financial stress affects us all in different ways. Worrying about money can have very serious effects, including insomnia, weight gain or loss, depression, anxiety, relationship difficulties and social withdrawal.

But where does all the worry come from? There are many pressure points, both external and internal, that can cause us to feel concerned when it comes to our financial situations.

External pressures include things like job security, possible medical emergencies (plus the added costs of Covid tests!) and general stress around the state of the global and local economies. If you’ve ever wondered, “Where are we going to end up?”, you might be a candidate for stress.

Internally, you might have noticed some changes in spending patterns during the pandemic. For example, many households’ entertainment and travel budgets have been diverted to things like home improvement. An increase in online shopping has also been observed, which can be problematic in some instances.

Communication is always important, particularly with your partner. Being open about finances can ease the burden.

There are also some basic financial tools that can help to alleviate finance-related stress in your life, including budgeting, debt management and building an emergency fund.

A budget is basically a summary of what money comes in and what goes out. Ideally you want to be in a surplus position, in other words there should be less going out than coming in.

Look for cost saving opportunities in your budget, for example on your insurance, medical aid, groceries or debt. Identify areas where you may be spending too much and try to cut these down.

Here are a couple of resources that might help:

Debt management is another important area when it comes to your finances. It’s really easy to slip into mountains of debt without realising it, especially in times like these.

Not all debt is bad. Your home loan is an example of good debt because your property is an appreciating asset. So, in theory, its value should always be higher than the amount you owe on it.

Be careful of spending on your credit card or store accounts, though. This is where many people fall into the debt trap. Try to get into the habit of paying back your entire outstanding balance each month, rather than trying to pay it off over a period of time.

If you find yourself battling with debt, speak to your bank about restructuring or make arrangements such as a payment holiday.

It’s also a good idea to have a rainy-day fund available in case of emergencies. There are many banks and investment companies that offer accessible savings facilities. For example, you can use this calculator from OUTvest to help you work out how much to save each month.

If you have money to invest, be sure to know upfront what your financial goals are. Perhaps discuss your goals with a financial advisor.

All these steps will help you to build your financial resilience. Remember, for the sake of your physical and mental health, we are living in extraordinary times. Now is a time for survival. Don’t worry about accumulation. Don’t compare yourself against others. And most of all, focus on getting through financially.