No financial adviser will even give you financial advice without having access to your budgets as a significant part of what is called fact-finding about you. This is required in legislation.

In times of an unrestrained virus, lockdowns and ongoing theft of taxpayers assets, budgeting becomes even more important.

The short term and the longer term are both uncertain, particularly for people who have already lost their jobs, may still lose their jobs or have been retired early.

Do two budgets (if you have not done one). One for the year ahead to see what you spend, and one into the future. This means both what you will receive and what you will pay out.

Once you have the first year’s budget, then work out a longer-term budget, taking into account inflation rates, of the things you expect might go up (healthcare bills), or down (using a car).

You must be cautious with a budget: Overestimate what you spend (particularly in the longer term), and underestimate what you will receive as income.

This a fact sheet, not a wish list. You should keep your short-term budget every month. Budget in advance and then compare that with the money you actually spend. If you are overspending, you need to budget again, find new employment, create a new job for yourself or depend on relatives.

The same applies to your longer-term budget which should be based on your monthly spend plus inflation, particularly medical inflation.

The first three steps you should take are:

• Cut both your shorter and longer-term budget into two on the spending side – a needs and a wants section:
• The needs section is what you consider you must spend. This includes things like paying a bond, food, utility services like water, electricity and any debit order you must pay to survive. Go through this with a fine-tooth comb and see what you can trim. For example, remove all things such as sweetened drinks and salted crisps on your food bill.
• The wants section is what you don’t really need. These are luxuries that you do not really need to survive. This is one place you can cut severely.

Take great care in making a sound decision. Below are some of the issues you should consider:

• Do you still need a car? It may be far cheaper to use Uber or public transport.
• Carefully consider any advice to stop contributing to a retirement annuity (RA). This is whether you are building up for retirement, or are one of the lucky ones in retirement who still contributes to an RA. There may also be penalties such as those used by life companies on not sticking to or reducing your contribution rates. There are lots of benefits to RAs, including: tax deductions against your taxable income, no tax on your returns and no estate duty. But most of all, you will take account of problems such as Covid-19 and future increases, particularly health costs.
• Avoid cancelling your assurance risk policies, particularly on what you own, without thinking about it very carefully. You should review it to make sure you are properly covered and not over-covered. You also decide to exclude certain things listing them for the insurance company.
• If you cannot afford the premiums on a retirement annuity or a contractual life assurance policy, speak to the life assurance companies. Most of them are letting you suspend payments for three to six months without penalties.
• Avoid downgrading your medical aid option, or worse, opting out of your medical aid. Always consider the savings of using generic medicines.
• Consider your bank charges. Many banks try to get you to use prestige cards so you can boast to the person behind you in the supermarket check-out queue. It is a waste of money, particularly when you are a pensioner and do not have as many demands on your wallet. Then check what type of account you need and compare bank charges.
• When you are shopping for groceries, compare prices, watch for specials, use the main grocery stores and not more expensive convenience stores. Be sure that a special is really something you need. For example, the price of an expensive product might be lower, but it is still high. It is a case of the more you spend, the less you save!
• Instead of watching television all day, consider going for walks, and reconsider spending large amounts on TV service subscriptions. It is amazing what you see when walking – and you will get healthier.
• Exercise at home, or outside instead of going to a gym.
• Never spend on impulse.
• Shop with a list and never when you are hungry.
• Cut out, or reduce money spent on drinking and/or smoking. This will also help you evade the rather odd laws on these issues.
• Cut back on things you don’t need, from entertainment and movies to eating out, right down to not buying coffee or a smoothie.
• Buy clothing on sales. Again, watch out: The more you spend, the less you save!
• Pensioner discounts. There are pensioner discounts in a lot of places from the Kirstenbosch Gardens in Cape Town to hardware stores and furniture shops. Spend time trying to find out where they are in your area and then simply ask wherever you spend money for a pensioner’s discount. It’s amazing how one question will often get results. Costs you nothing to ask.
• Consider downgrading your home; or sharing your home with others; or sharing with someone else; or building a flat on the property of your children.
• Consider taking on a part-time or full-time job.

This is the last column in this series in helping new pensioners and existing pensioners to adjust to the changing face of the South Africa economy. These changes will continue for a long time – well after any vaccination is found for Covid-19. In South Africa, this has also been overshadowed by the past and current corruption.

Finally, don’t wait. Take action now before it gets too late.

My thanks to Business Maverick for publishing the columns for pensioners. It is very important that these columns are read by both pensioners and their dependents as there are many issues that affect both.

These columns, with additional information, will be published as a book in early September 2020. The book is: Secure Your Retirement: How to Beat the Effects of Corruption, Ratings Downgrades and Economic Lockdowns. It is written by myself and top financial adviser, Wouter Fourie CFP and is published by Zebra (which is part of Penguin Random House South Africa). DM/BM

Bruce Cameron is the semi-retired founding editor of Personal Finance of Independent Newspapers, and with co-author, Wouter Fourie CFP,  are the writers of the best-selling book, The Ultimate Guide to Retirement in South Africa.