Financial Crisis: How do I make do with Less?

HOW DO I MAKE DO WITH LESS?

A sudden drop in salary will impact the lives of all who depend on that income. Every person from every nation is weathering the Coronavirus storm, and you and your dependents are in the same boat.

There is no blame – this predicament is out of your control.

There is no shame – you have not lost your pride, and there is no reason to feel guilty.

The storm will pass, but right now you need a lifeboat – a Financial Recovery Plan.

Tips to help you to achieve your Financial Recovery Plan.

  1. Talk about it.

If it was taboo to talk about money in your home in the past, now is the time to put it on the table. COVID-19 has opened the door for the media to bring the reality of the Financial Crisis into your living room. Your dependents who are old enough to understand the reason for lockdown, are probably aware of the sacrifice of livelihood to save lives. Making a plan is a constructive process to empower people who may be feeling helpless to being helpful. Consider that you are ‘in it to win it’ together.

Breaking the news. If you need to tell your family about the drop in income, suss out the dynamics in your household and choose an appropriate moment.  If you feel the need to ‘be strong’, how about talking to a counsellor at LifeAssist beforehand so that you can feel better equipped for this task?

If your family already knows, and you feel they can benefit from counselling, encourage them to call LifeAssist.

The conversation could go something like this:

  • We are in this position right now through no fault of our own.
  • Thousands of people have had to sacrifice livelihood in the mission to protect lives from the Coronavirus.
  • We need to make some personal sacrifices.
  • To survive this financial crisis, we need to work together.

When you are in the right emotional state you will be in a better headspace to confront reality and find solutions.

  1. Choose your team. Invite the person or people who can be part of the solution.
  • If you are in a committed relationship, your partner should be involved.
  • If need extra input, or are single, you can draw on the support of a trusted friend or confidante, a business consultant, or a financial coach from LifeAssist.
  • If your child has some financial savvy, involve them in this as a valuable life lesson. There are also decisions that directly affect the child/ren that they will adopt more readily if they understand the big picture.
  1. Time it right. Find a time that is free from distraction, and when people are not tired. You might now be able to achieve the full plan all at once. You can schedule follow up time as it unfolds.
  2. Set some ‘rules of engagement’ to ensure mutual respect, and that you don’t add more stress. This can be a good opportunity to reconcile your finances, but also reconcile relationships. A fresh start. Relationships are priceless and are the most valuable asset.
  3. Start with the end in mind. It is what it is. Focus on the here and now, and plan for the future.  It is not constructive to dwell on the past.

What do you need to achieve this week, this month, by this time next year? Remember, COVID-19 is not Forever, we will recover, but it may take some time. Understand that you may need to make drastic sacrifices now so that you can preserve the things that really count.

  1. Get going. Download a BUDGET TEMPLATE

This exercise can be done independently, but where there are more sources of income in a household, you ideally want to end up with a transparent and joint solution. Money matters can be emotional. Prepare yourself for some differences of opinion – hear each other out.

  1. Draw bank statements from the past few months to see how much you ended up with by month-end.
  2. Take your most recent bank statement and go through all the expenses.
    • Debt: overdraft, credit card, store cards.
    • Needs (essential)
    • Wants
    • Luxuries
  3. Create a new budget, and get your team to commit to it.

This is a helpful document if you want to apply for further credit, or need to apply for relief from a bank, a store, the school or the municipality.

  1. Allocate the tasks that are needed to put the plan into action – like contacting the bank or applying for relief or following up on employee benefits or UIF.
  2. Invite ideas of how to save or make money.

Aim for an outcome of hope and optimism, rather than despair.

LifeAssist offers budget coaching and debt management services.

 

 

Source: Inspire Wellness

https://www.apa.org/helpcenter/holiday-stress-finances

https://www.aamft.org/Consumer_Updates/Financial_Distress.aspx

27 April 2020