How to recession-proof your finances and still have fun

Last updated on 6th April, 2023 at 03:33 pm

Yes, you can look after your money during stressful times, find pockets of fun and still save! Here’s how.

Reading time: 4 minutes

In this article you’ll learn:

• How the recession can impact your finances, and how to brace for it.
• Why investing and cutting back on spending can help ease your time during the recession.
• About the savings that can help you enjoy the simple things in life thanks to your Sanlam Reality membership.

It’s no secret that times are tough for everyone right now – but there are ways you can buffer your money from stressful economic periods to make you sleep a bit easier at night. “Currently, the South African economy is following the US and Europe whereby we are struggling with high inflation, leading to interest rates being forced higher,” says Wayne Hutchinson, business principal and managing director of Berghshire Wealth BlueStar, a Sanlam-authorised financial services provider. This means that everyone has to tighten their belts. But there are ways to help bolster your finances, even during times of stress. Here’s what to plan for now.

Increase your emergency savings

You should aim to have an emergency fund that can cover three months of expenses if absolutely necessary. It may sound like a massive amount but by saving for it every single month, you will soon build up an emergency fund. Don’t cut this from your budget if you’re trying to reduce your expenses – the rainy day might come sooner than you think!

Use this calculator to help you get on track with your savings journey.

Keep investing

“Look at interest-bearing assets to invest in light of the current prime interest rate being as high as it is,” Hutchinson says. “You could yield a higher return by investing in less risky assets.” Speak to a financial planner about maximising your investments during this time – and think about diversifying, Hutchinson further adds. “Don’t disinvest your investments; if you have a portfolio of risky assets, be patient and the markets could favour you later.”

Look into retrenchment cover

Taking out a policy that protects your income for a few months in case of retrenchment can be a prudent choice; speak to your financial planner about adding it to your insurance portfolio. “Income protection is extremely important,” Hutchinson stresses, as it will help you cover your expenses and debt obligations. “Also make sure you have bond protection, which can cover your payments in the event of retrenchment,” he continues.

In the event you do get retrenched or lose your main source of income, multiple income streams are incredibly value to help maintain cash flow within your household to tide you over until your main source of income is restored. Renting out parts of your property and monetising niche skills or talents you may have are creative ways to help you keep afloat.

Cut back on spending

Take a realistic, clear-eyed view of your budget. Where are you spending money you could be putting towards savings? Perhaps you are getting takeaways twice a week, or buying groceries at the most expensive store because it’s the most convenient…

Look into ways to cut back on non-essential spending, such as starting a carpool at work and reducing luxury expenses. Remember that if you are a Reality Club or Access for Sanlam Group Risk member, you can enjoy savings on groceries at Shoprite or Checkers using your Discount Coupons benefit. Plus, download the Sanlam Group ENTERTAINER app for free and enjoy 2-for-1 deals on dining, lowering your monthly entertainment bill.

With your Sanlam Reality entertainment benefits, we can help you save on the fun things in life so you feel the recession that little bit less. Reality Club, Core and Plus members, as well as clients with Wealth Bonus Lifestyle benefits, can save up to 20% on their home data bill when they sign up for a home fibre plan with RSAWEB using their Sanlam Reality membership.

But that’s not all! Stream to your heart’s content and get up to 5 months’ Showmax access on us, thanks to your Sanlam Reality membership.

Clients who qualify for Wealth Bonus Lifestyle benefits have access to discounted lifestyle benefits, meaning smart savings when times are tough. As part of your Wealth Bonus Lifestyle benefits, you get 2 months’ Showmax streaming on us, R35 2D movie tickets and R35 refreshment combos at Nu Metro, 10% off FlySafair flights and RSAWEB fibre to your home, 20% off Intercape Bus tickets and much more!

Don’t take on expensive short-term debt

“Start paying off your smaller debt obligations and steer away from loans and credit cards,” Hutchinson suggests. “With high interest rates, you could fall into a debt trap.” Maintain your current payments and close all your high-interest accounts, he concludes.

Did you know that as a Sanlam Reality Club, Core or Plus member, you can get discounted movie tickets and refreshment combos at Nu Metro? Take the family out for fun, for less! Book your tickets here.