As the lockdown eases it may be tempting to get back to what was once normal as quickly as possible, but a moment of reflection before you do may be worthwhile and could save you money.
Shafeeqah Isaacs, head of consumer education at financial services provider DirectAxis, says that while the lockdown has had many negative consequences, not least for the economy, there may be some useful lessons we can take into the new normal.
The hard lockdown, with its prohibitions on unnecessary travel, eating out, socialising, leisure activities, alcohol and cigarettes, potentially gave people some insight into what they could cut back on or live without and save some money as a result.
“We’re certainly not saying you should live your life like you’re in lockdown, but rather consider whether the enforced cutbacks meant you weren’t spending as much each month. Then think about whether giving up smoking, eating out less regularly or not having your friends over every weekend might mean having more money at the end of the month.”
For people who’ve been working from home during lockdown, a move back to the office might mean a nice change of scenery and a chance to catch up with colleagues but could also impact their back pockets.
Obvious work-from-home savings are commuting costs, reduced spending on coffees and lunches and, for some, the need to maintain a five-day-a-week professional wardrobe. Of course, these need to be balanced against the costs of running a home office, such as connectivity and data, and whether your employer is prepared to contribute to these.
While there’s plenty of information on the benefits of working from home, both for employers and employees, it’s hard to find any definitive studies on how much a South African office worker could save. A US study estimates these savings to be about $4 000 a year for American workers. It is probably less than the equivalent +/- R70 000 in South Africa, where the practice is less well established.
There may be other less obvious savings. For example, if both you and your partner or spouse are working from home, do you really need two cars? Selling one would save not only vehicle finance repayments but also insurance and maintenance.
“Before you rush out to get your post-lockdown life back, it’s worth thinking about how it could benefit you financially if there are some things you can live without or cut back on.”
If you do apply some lockdown lessons and are able to save a bit each month, consider what you are going to do with the additional disposable income, says Shafeeqah.
“It’s all too easy to blow it on things you don’t really need. By all means give yourself some reward, but perhaps consider using the rest to pay off your debts faster.”
At a prime rate of 7% South Africa’s interest rates are the lowest they have been in half a century. This means that it’s a good opportunity to reduce what you owe and potentially save some money over the long term.
For example, if you have a five-year, R250 000 loan at 12% interest for five years and you pay off an additional R500 a month you’ll reduce the term of the loan by six months and save R9 707,90.
“Think of it as an investment in yourself,” says Shafeeqah.