4 Things that can haunt your household finances this Halloween

The world is experiencing a lot of turmoil now, and this can lead to hair-raising portfolios changes and fluctuations.

While economic and geo-political factors can impact our finances there are things we do (or don’t do) that can also result in some scary financial scenarios.

If you find that the world’s turmoil or your apathy has resulted in your household finances not looking up to scratch the good news is that, just like Halloween, it doesn’t have to last forever.

Here we look at four things that could make your household finances look scary. The key is not to panic and to take action now.

1. Increasing inflation

Just like zombies eat brains, inflation can eat into the return that your savings can make. South Africa is lucky in that it is one of the few countries were inflation is decelerating. But goods and services are still expensive, so it’s wise to stick to a budget to make sure you’re keeping out of the red.

2. Higher interest rates

Interest rates could be going up next month (November 2022) The South African central bank has, after all, raised interest rates at the last six monetary policy meetings.

There’s speculation that the central bank will still be worried about core inflation. According to a note issued by Investec’s Annabel Bishop the South African Reserve Bank (SARB) could hike its main lending rate by a further 100 basis points.

This means your credit (personal loans, car loans and home loans) will be more expensive. While credit will be more costly make sure your savings are working harder and that you’re getting the best rate for your savings. Find out what your own bank is willing to offer you in terms of interest and shop around to see what other financial institutions are offering, particularly if you haven’t compared rates in a while.

3. Under insurance for cancer

According to Old Mutual one in 27 women are at risk of developing breast cancer in South Africa. They add that with the average 10-year survival rate for women with non-metastatic breast cancer being 84%, very few are prepared for the economic impact of cancer survivorship.

So, what should you do if you’re not prepared for such a hit to your finances? Dr Bielqees Salie, senior medical officer at Old Mutual says: ‘The first step is to purposefully take part in healthy behaviour and preventative strategies to decrease their risk. This can include quitting smoking, lowering rates of obesity, and lowering alcohol consumption.

‘When it comes to our bodies, we need to take those subtle changes and symptoms seriously and rather seek medical attention sooner rather than later.’

Apart from looking after one’s health, it is as important to plan for the financial impact of a positive cancer diagnosis.

‘It is important to protect ourselves from the financial impacts of cancer and other illness by having the appropriate medical care as well as illness insurance, that can help you focus on your recovery should illness occur.’

4. Off track retirement plans

Many people choose to withdraw their pension or provident fund savings when they change jobs. If you haven’t yet tapped into your pension, there are ways to preserve it if you’re switching jobs.

‘One way to achieve a financially secure retirement is to have long service with one employer but the other alternative is to preserve savings from different employers by leaving them in the same fund, transferring to the new employer’s fund or investing in a preservation fund or a retirement annuity in one’s own name,’ says Andrew Davison, head of advice at Old Mutual Corporate Consultants (OMCC).

If you have tapped into your pension, it’s not too late to try and play catch up. And if that’s not possible, you can always push back your retirement. ‘Finding an alternative source of income, even if it’s a contract position or a part time position, may allow you to delay your retirement by deferment, where effectively you say that you would like your savings to be parked until you are ready to start to take a pension.

The longer you derive this income the further your retirement savings will stretch when you are ready to ‘hang up your boots’ for good,’ says Davison.