Having to now pull the purse strings even tighter is a reality for thousands of consumers who just a year ago were living a very different life.
Eloise Boezak, Head of Customer Experience and Customer Empowerment at African Bank, says the stark reality of Covid-19 has derailed many families’ hopes and dreams.
“Not only are we faced with the loss of loved ones to the disease, but also retrenchments and having to find extra money for all sorts of things we never factored into our lives,” she says.
“This is a critical time to work carefully with the income you have, no matter how small that income is – and to make good money management a habit, as the effects of the pandemic will be with us for years to come.”
An African Bank customer’s story
An African Bank customer, who we shall name Daniel, shares the story of how Covid-19 has affected his family. They have had to make many adjustments and dip into their emergency savings fund.
“We have gone from a comfortable two-income existence just a year ago to cutting down on almost everything. It has been tough but I am grateful that I will be far better at managing my finances when this is all over,” he says.
Daniel is a journalist and lives with his self-employed fiancée and her mom, who has serious health issues.
“We felt it better that her mom was close by and so moved her in with us. I also have a daughter from a previous relationship who lives with her mother.
“Both my fiancée and I brought money into the household each month so we were always able to meet our financial commitments – medical aid memberships, child maintenance, car payments and other expenses – and still enjoy the luxury of eating out and other forms of entertainment.”
Then Covid-19 and lockdown happened.
“It wasn’t long into lockdown last year that we realised the business environment had taken a dramatic turn for the worse. This threw a serious spanner in the works with my fiancée’s business. Apart from companies not wanting to spend money, face-to-face meetings, which are so important for relationship building when you have your own business, were no longer possible.
“She obviously had to continue canvassing for business but those trips cost money in petrol, as do the countless phone calls made to get appointments. The seemingly endless cycle of rejection also takes a heavy toll on your spirit.”
The downturn in his fiancée’s business resulted in Daniel becoming the sole earner.
“While we are still managing, there is very little room to manoeuvre. We used to have a sizeable emergency fund, just in case something went wrong, but we are eating into that just to pay bills.
“The cost of food is rising at a scary rate, as I’m sure all consumers have experienced. We seem to pay so much more for so much less these days.
“My fiancée has become obsessed with cost-cutting and not wasting anything. She looks for deals relentlessly. We have downgraded our TV subscription, one of the medical aid policies and her cellphone contract.”
Daniels says his biggest challenge has been staying positive.
“The longer this situation continues, the worse things will get. If things don’t change, I will soon deplete my emergency fund, and then my salary will not take care of all our needs. That might mean drastic changes, including a change of accommodation.”
His advice to others is to look after your mental and physical health and live within your means.
“It is easy to succumb to depression due to financial pressure, but remember money can’t fix a broken relationship with your family. Despite our tight financial situation, taking on debt remains a last resort.”
Boezak reminds consumers that there are multiple platforms to seek financial advice.
“Approach your bank or take tips from reputable online sources if you need and financial advice on issues like budgeting, saving money, starting an emergency savings account, investing or consolidating your debt.
“The right advice can set you on a path to financial wellness again. The biggest thing to avoid is debt and not speaking to your creditors when you are unable to meet your repayments,” Boezak concludes.