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How will the Corona virus affect your finances?

Opinion

How will the Corona virus affect your finances?

Reading Time: 3 minutes

The South African government has taken decisive measures to reduce the spread of Corona virus in the country. This is in line with the steps taken by a number of economies around the world. These measures include travel bans, limited public gatherings, school closures and stringent border control.

This will have a direct and a negative impact on the entire economy. Depending on how long these restrictions are in place, the cost could ascend into BILLIONS of rands. At a personal level, you might be affected in a number of ways depending on:

  • How you make a living
  • Where you work
  • The impact on your employer/company
  • The types of investments you hold
  • Whether you’ve paid for travel arrangements

If you work in Travel, Tourism & Hospitality

As a result of travel restrictions, there will be fewer tourists visiting popular attractions. If you work in this sector then you may take a direct hit to your income. Others who are also likely to feel a direct impact include waiters who earn money from tips in addition to their basic income. If you are a shift worker then you may get reduced shifts which could also reduce your available income. As a business owner in this sector, you may need to tighten your belt.

If you work for or run a small business

If you run a small business then you might experience slower business than usual. Businesses that are centered around public gatherings may be especially affected. These include wedding companies, public markets and other similar businesses. There may also be a reduction in clients due to fear – for example, clients might reduce their visits to malls, hairdressers and to other small vendors.

It will be prudent to reduce expenses wherever you can and to renegotiate payment terms with your suppliers.

If you hold shares and other investments

Furthermore, there has been quite a lot of turmoil in the markets. You will have noticed your share portfolio took a major hit recently, and there is still an amount of uncertainty – which is worsened by the current oil price war. This is definitely not the time to make emotional moves. It is vitally important to check in with professional advisers before making any drastic decisions.

If you’ve already paid for travel arrangements

Finally, you may even be forced to cancel your travel plans. This potentially means forfeiting any payments for tickets, accommodation and visa applications, among other things. If you have travel insurance make sure to lodge a claim. Should you be covered.

You should also check on the possibility of postponing your travel arrangements and know that changes made to dates may incur additional fees.

What can you do

It is important to note that the government is aware of the economic impact and steps are being taken to prop-up the economy. President Ramaphosa in his address made mention of a stimulus package to support businesses through this crisis. Other countries have also taken similar measures.

If you are at a high risk of losing income then reducing your non-essential spending may be one of the best actions you can do for yourself and your family. Building up your emergency savings can help cushion the blow if this persists for longer than expected. It may feel that it is too late to try build up substantial savings, but every little bit goes a long way.

Again, if you have share investments then be careful not to make any rash decisions as a result of dropping market prices. Always seek professional advice.

Remember to practice good hand hygiene and to look after yourself and your loved ones.

24 hour Corona virus hotline: 0800 029 999

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Nkosi Zikhali

Nkosi is passionate about financial education and writes in his personal capacity. Opinions expressed here are his own and do not necessarily reflect the opinion of Zonotho and any of its staff members.

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