What Happens If: The Financial Questions You Haven't Answered Yet

The question most people are not asking

When someone takes out a home loan, they usually run one number: can I afford the monthly instalment at today's rate? When someone invests, they usually run one number: what will this be worth if it grows at X% per year? When someone takes a salary, they usually run one number: what does that gross figure become after tax?

All of those calculations are useful. None of them are the most important calculation to run.

The most important calculation is the one that starts with 'what happens if.' What happens if the rate goes up by 2%? What happens if I lose one income in a two-income household? What happens if I need to stop contributing for a year? What happens if the return is 4% instead of 9%?

Most people never run those numbers. Not because they are lazy or irresponsible, but because the question feels uncomfortable — and because nobody has made the case for why knowing the answer is better than not knowing it. This article makes that case.

Why 'I'd rather not know' is the most expensive position in personal finance

There is a widely held instinct that some financial information is better left unchecked. The assumption behind it is that knowing a bad number will make you feel worse without giving you anything useful to do about it. That assumption is almost always wrong.

When you do not know what a rate increase does to your bond repayment, you find out when the rate increases — under pressure, with no preparation time, and with fewer options than you had before. You cannot renegotiate a loan after the rate has already moved. You cannot reduce your lifestyle expenses in the same month the repayment rises by R2,000. Reaction mode is expensive.

When you know in advance — when you ran the calculation six months ago and saw that a 2% rate increase would add R1,850 to your monthly repayment — you have time. You can build a buffer. You can pay extra into the bond while rates are lower, shrinking the balance before the increase hits. You can adjust discretionary spending before it is forced out of you. You can choose. That choice is the thing not knowing takes away.

The same logic applies everywhere. An investor who knows that a below-average five-year return still produces a workable retirement balance does not panic-sell during a market correction. They made the decision before the correction, not during it. Someone who has modelled a one-income scenario knows whether the household can survive it, and for how long, before it happens — giving them the option to build reserves rather than scramble.

The four scenarios worth running before life runs them for you

Not every what-if scenario carries the same weight. There are four that come up most often in real financial hardship, and that are most worth stress-testing before they become real.

The first is a rate increase. For anyone with a variable-rate home loan — which is most South African homeowners — the prime lending rate is not fixed. South Africa has seen prime move by more than 3 percentage points within a single tightening cycle. Running your bond repayment at current prime, then at prime plus 1.5%, then at prime plus 3%, takes about two minutes. The number at prime plus 3% is the one worth budgeting around.

The second is an income reduction. A retrenchment, a reduced-hours arrangement, a business that takes longer to grow than expected, a parental leave period — all of these shrink the income side of the household equation temporarily or permanently. Running your bond repayment or loan commitment as a percentage of a reduced income answers the question: how long could we sustain this, and what would have to change?

The third is a contribution interruption. For anyone saving toward a long-term goal — retirement, a deposit, an investment target — knowing what happens to the ending balance if contributions stop for one or two years matters. It rarely changes the conclusion ('I should keep contributing') but it does change the emotional urgency attached to it. The gap between 'I will have R3.2m' and 'if I stop for two years I will have R2.6m' makes the abstract concrete.

The fourth is an investment underperformance scenario. Almost every long-term investment projection uses an assumed annual return. That return is rarely achieved every year. Running the same calculation at the historical average, then at 2% below it, tells you whether your plan is robust or only works under an optimistic assumption. If the 2%-below scenario still produces the outcome you need, your plan is solid. If it does not, the time to find that out is now, not at retirement.

Worked example: the bond owner who never tested the rate

Consider a household that took out a R1,600,000 home loan in mid-2021, at a rate of 7.25% over 20 years. Their monthly instalment was approximately R12,640. They checked the affordability against their combined income, it worked comfortably, and they signed.

They did not run the instalment at 7.25% plus 3%.

By late 2023, after a series of rate increases, prime had risen by 4.75 percentage points. Their rate was now effectively 12%. Their monthly instalment had risen to approximately R17,600 — an increase of nearly R5,000 per month. Over 12 months, that is R60,000 more than their original budget assumed.

None of this was unforeseeable. South Africa had a rate cycle of similar magnitude between 2014 and 2016. The information was available. The scenario was runnable. The only thing missing was running it.

A household that had run the R17,600 number in 2021 might have: taken a smaller loan, leaving more room for rate movement; built a buffer equivalent to six months of the higher instalment; paid extra into the bond during the low-rate period to reduce the capital on which the higher rate would be applied; or structured spending to absorb a higher repayment without cutting essentials. Any of those responses, taken in advance, is better than all of them taken simultaneously under financial pressure.

Knowing changes the decision, not just the outcome

There is a subtler benefit to running worst-case scenarios that goes beyond preparation: it changes the original decision.

A buyer who runs the bond at prime plus 3% before signing sometimes decides to buy a less expensive property — not because they cannot technically afford the current-rate instalment, but because they do not want to live with the risk at prime plus 3%. That decision, made before the loan is registered, is a genuine choice. The same information discovered two years into the loan is a constraint.

An investor who runs the below-average-return scenario sometimes increases their monthly contribution by a modest amount — R500 or R1,000 — as insurance against a poor-return decade. The scenario revealed a gap between their comfortable assumption and their actual requirement. The fix was small because they found it early.

Someone running a one-income scenario might discover that the household genuinely cannot sustain the current financial structure on one income for more than three months, and build a specific fund to extend that runway. That fund exists because someone asked the question and found the number uncomfortable enough to act on.

In each case, knowing the bad number made the decision better, not worse. The discomfort of the scenario was the point.

The 20-minute what-if habit

Running your financial scenarios does not require a spreadsheet, a financial adviser, or a dedicated afternoon. It requires a calculator and a willingness to type numbers that feel uncomfortably large.

For a bond: open the Bond Repayment Calculator and enter your current loan balance, your current rate, and your remaining term. Note the monthly instalment. Then increase the rate by 1.5%. Note the new instalment and the difference. Increase it by 3%. Note that number. Those three numbers — your current payment, your payment at prime plus 1.5%, and your payment at prime plus 3% — are the rate sensitivity range you need to plan around. The whole process takes under two minutes.

For a long-term investment: open the Compound Interest Calculator and enter your current balance, your monthly contribution, and your expected return. Run it to your target date. Then reduce the return by 2% and run it again. Note the difference in the ending balance. That difference is the answer to 'how much does my plan depend on the assumed rate?'

For a loan payoff goal: open the Personal Loan Calculator and enter your current loan details. Add an extra R500 per month. Note how many months earlier the loan clears and how much interest you save. That number is the cost of not paying the extra R500 — real money, already calculated, sitting in a tab on your browser.

The habit is not about anxiety. It is about having answers before the questions become urgent. The 20 minutes you spend running scenarios when nothing is wrong is worth more than the same 20 minutes spent scrambling when something is.

The difference between a guess and a number

Most people have a rough sense of their financial position: I think I can afford this, I assume the investment is growing, I believe the loan will be paid off by then. These are guesses, and guesses carry a specific kind of anxiety — the nagging awareness that you have not actually checked.

Running the numbers does not always produce good news. Sometimes the number you get is a number that requires action, adjustment, or a conversation you had been putting off. But even that outcome is better than the alternative. A number you can act on is a problem with a solution. A guess that turns into a crisis is a problem with a deadline.

There is also a less obvious benefit: the scenarios that come back fine feel different than the assumptions that have never been tested. Knowing that your bond survives a 2% rate increase — because you ran it and checked — is meaningfully more settled than assuming it probably will. The certainty is specific and evidence-based rather than vague and hopeful. That distinction matters more than it might sound, especially when rates actually move and your neighbours are anxious and you are not.

Run the number. Not because it will always reassure you — sometimes it will not — but because knowing where you stand, at this moment, with this much information, is always better than not knowing. The calculator is the tool. The decision to open it is yours.