Covid 19 was a crisis many of us didn’t see coming – but 2020 will go down in history as the year most of the world’s economies shut down and was forced to go into lockdown. Schools shut, shops closed and many of us across the world were confined to our homes under strict instructions. Social distancing became a new phrase that we hadn’t heard before – and wearing masks in public became the norm. The sale of alcohol was banned in South Africa. The whole world seemed to be struggling with the pandemic and scientists battled to find a vaccine.
The world’s problems are vast – but when we look at those households and individuals who struggled throughout the past year during this pandemic, we realise how detrimental the virus has had on all aspects of our lives. News24 have been publishing about the financial impacts on South Africans. They spoke about a survey conducted by PayCurve, highlighting the fact that many South Africans (around half of those surveyed) had to take on 2nd jobs to get through the month because of the Coronavirus pandemic. Finances are at an all time low and the economy has shrunk. This has made it particularly hard for those lower income families that were already struggling before the crisis even hit the country.
However, it isn’t just as simple as getting a second job, because there are few jobs even being advertised. Plenty of businesses have had to shut down completely, while others are making strict cutbacks. Pubs, restaurants and shops have been some of the worst hit during this crisis.
It is therefore no surprise that many South Africans are looking to short term loans to help them get through the month. Wonga South Africa, who provide this type of short term credit, have reportedly seen a surge in applications since lockdown restrictions eased off and businesses began to reopen. This is because so many people simply can’t afford to make ends meet. Wonga South Africa are urging all applicants to think carefully before applying – and to know the full details of the loan before committing. Wonga are open and transparent about their contracts, but some loan companies, or loan sharks are not. This is very dangerous as it could lead you to have hefty monthly repayments that you are never likely to be able to afford, causing a further spiral downwards in your financial situation. It is therefore important that you only use reputable short term loan providers. South Africa has many residents that might benefit from loans, although it is vital that the loans are being used for the right thing. For instance, you should not be getting a loan to pay for a holiday or a new TV, as this is a luxury payment that is not really necessary. The debt incurred by this payment and the effect on your credit score is probably not worth the item you are buying. However, a loan to cover a bill or unexpected medical expense is probably more sensible and could help you in the long run. So, weigh up your options before applying for any kind of short term loan.
It is also vital that households learn how to budget their money by using a budget template. With this kind of template, you can get an accurate overview of your finances. You can input all your incomings and outgoings, and note extra payments that you have made. This allows you to see where all your money has been going. One debt charity said that at the end of your template, you should deduct the total amount you spend each month from your monthly income. If you’ve got any money left over after you’ve paid for everything you have a ‘budget surplus’. If you’re spending more money than you’ve got coming in, then you have a ‘budget deficit’ and you should label it as this.
Of course, if you have lost your job during the pandemic, no amount of budgeting will help you to make up for the shortfall of one of your salaries being removed entirely. This is incredibly stressful, and might even have you awake at night. In fact, debt can cause many issues with mental health, including depression, anxiety and an overwhelming sense of doom. It is important that if you feel like this, you talk to someone about it. If you cannot talk to a close friend or family member, you should speak to a debt charity who will not only provide you with emotional support but also some practical advice on what to do next. They are confidential and will have a good understanding of your circumstances, so they will not judge and are only there to help. Who knows, they may be able to consolidate your debts and ease things for you. They may be able to suggest schemes that you are eligible for.
Remember that you really are not alone – there are many other people in the same boat as you. Perhaps around 50% of the country, as stated at the start of this article. So, you don’t have to feel that anything has been ‘your’ fault. Many families who have savings to fall back on are also finding it hard to survive during this time, as it is a problem that has affected all types of people and all corners of the globe, from every industry and walk of life.