Four ways to spring clean your finances and still remain covered
It’s no secret that South Africans are struggling financially right now. According to TransUnion’s latest Consumer Pulse Survey, six in 10 consumers (61%) say their household income is still being negatively impacted because of Covid-19.
What’s more, they’re battling to pay their bills and loans. four in 10 consumers have been in arrears for a bill or loan in the past 3 months, indicating that a substantial proportion of South Africans remain under financial pressure.
So how do cash-strapped South Africans start cleaning up their budgets and preparing for 2022? As we look for ways to cut back and pay off debt, how do we decide what’s important and what to prioritise? Getting back on the road to financial health takes careful planning, says Wynand van Vuuren, the client experience partner at King Price Insurance. Just as you spring clean your home, you should do the same with your finances.
Here are King Price’s top 4 tips for spring cleaning your finances:
Rethink your approach to budgeting
Most South Africans hate the ‘B’ word. We associate it with financial hardship and giving up the things we love. Rather take a fresh view of budgeting, suggests Van Vuuren: “Instead of thinking of budgeting as a sacrifice, think about it as a way of designing your life around what’s important to you: Saving for a home, spending time with your family, or even travelling. That will help you prioritise your spending and saving.”
Don’t cancel your insurance: Manage your risks
Insurance is often one of the first items to get the chop when we’re looking to trim our budgets. Don’t. It’s not worth it. Rather, know your risks and insure accordingly. “Think about where you might be vulnerable to loss or damage, and whether you can cover the damages yourself if something were to happen. What happens if you have a car accident, or your house burns down? How would you recover from such an event?” says Van Vuuren.
To save money, some consumers downgrade their car insurance to only cover third party, fire and theft. This means they won’t be covered for accident damage - which is the most frequent loss that insurers see.
Review your existing insurance
Take a good look at your current insurance schedule, and what it covers. Are you paying for assets that you don’t need, or possibly don’t even own anymore? Do you insure jewellery that’s kept in a safe and never worn out of the house? Do you have shortfall cover on cars that are paid off? Are your cars a year older, but you’re still paying last year’s premium – or higher? Are you working from home, and your house is always occupied?
These are all areas where you can save money by demonstrating lower risk. You can also reduce your risk (and your premiums) by installing additional security measures like electric fencing and an alarm system linked to armed response.
Combine your policies
Insurers love clients who have more than one policy with them – and they’ll generally reward you with a discount. So, if you cover your house contents and a car, for example, you’ll pay less. You’ll also benefit from a multiple car discount if you cover two or more cars – up to 20%, in some cases.
“There are lots of relatively easy ways to cut your insurance costs, without giving up your insurance and leaving yourself exposed. Even small amounts all add up. Then you can redirect those savings into something that pays off debt or helps towards building the life you dream of,” says Van Vuuren.