This year’s Budget Speech was touted as an unprecedented emergency intervention, however it left quite a few questions unanswered. The highly publicised public sector wage bill discussion, quelling wide-spread corruption and just how government plans to make up a more than R300 billion shortfall in tax collection were not definitively dealt with. What was clear, however, was that South Africans will have to cough up more from next year to foot the bill – and they will need sound financial advice to help weather this.
This is going to have a trickle-down effect on us all – bringing the need for proactive, financial advice to the fore. Although specifics around tax and other measures that directly impact consumers will only be fleshed out in February 2021, I will have a role to play in helping you get your finances in order in preparation for what is shaping up to be an expensive 2021 and beyond. Add to this the projected rise in unemployment and you’ll find

that income protection and shoring up emergency savings will become a number one priority for many households. We are going to need our financial advisers more than ever in the year to come. We need to preparation, protection and provision.

Preparation for taxes
Tito Mboweni announced the plan for R40bn in tax hikes over the next four years in an effort to boost income. That is going to start with a R5bn increase in 2021. Of course an increased tax burden will mean decreased spending, so consumers will need to seriously and extensively review their financial goals and aspirations to account for these tax increases. Additionally, as the country amasses extraordinary levels of national debt, SARS will certainly adopt a more stringent approach to tax collection. Anyone banking on that tax return is going to need to fight a lot harder for it as SARS will be hesitant to hand money back to consum-

ers without adequate evidence.

Protection of your income
There will be more job losses in the coming year and now is the time, more than ever, to ensure that your ability to earn an income is protected. This means looking at your level of retrenchment cover and disability insurance cover wherever possible.
As debt is the enemy of income, it will be inadvisable to see lowered interest rates as a good reason to amass more debt. While this is a short-term relief for those in debt, people need to exercise extreme caution around taking on debt even when interest rates are low. Rather use any extra cash to pay off existing debts as repayments will be lower and thus an opportunity to lessen your debt load.

Provision for the future
All of the above cascades down to the financial wellness of South African house-holds. The loss of income and fragile employment situations mean that people need to ensure they have emergency savings. We should all be saving 20% of our income, 5% of which should be for emergencies. A rainy day fund is a must,

and should ideally include at least six months of living expenses. The potential for rainy days are coming, and are al-ready here for so many South Africans.

The best way to do this is to look at it holistically in terms of rethinking your financial plan. Covid-19 has changed the way we live and so it goes without saying that our financial plans will need to be adjusted in order to take this new reality into account. It will mean different things for different people and for some it could mean having to change goals entirely, while for others it may mean re-prioritising or simply shifting timelines. But what is applicable to everyone, no matter who you are, is that it’s critical to have a financial plan, and if you have one, it’s an opportune time to get in touch with me to adjust it for our new reality.
South Africans are going to be looking to trusted partners to get them through this, which means that financial advisers have just unofficially made it onto the list of essential services.