Sylvia’s Message

Can you cope with another financial emergency?

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Prior to the Covid-19 pandemic and the subsequent lockdown in 2020, not many of us thought of the possibility of getting hit by a mega negative event that could hit and deplete our savings. Occasionally, we have experienced financial emergencies, which were swiftly addressed with interventions ranging from dipping into emergency funds or even borrowing.

However, currently some of us still have lingering effects of the shocks to our income. Even as we try to figure out how to manage our money differently, we are faced with the possibility of a repeat event.

As such, the dilemma most of us are grappling with right now is whether we have built enough resilience to be able to navigate the possibility of another shock to income. For example, have you built up the depleted emergency fund or are you still figuring out how to deal with the mounting consumer debt you used to plug the budget deficit? What is sufficient to give you comfort that you can deal with any eventuality? More importantly, are you better prepared for any lengthy emergency given that you have experienced it in the recent past?

As I have said before, none of us can predict the future, but we can navigate it, better if we are better prepared. Ideally, we should have learnt from our past money mistakes. With those lessons at the back of our minds, we have to do whatever it takes in terms of filling the knowledge and skills gap. This will enable us to generate extra income  and be able to comfortably  face an uncertain future.

Obviously, if you live hand to mouth, it is a tall order to expect you to think about the future. Your priority is the next meal. However, even in this kind of scenario, there is something you can do to improve your situation. You only need to work on the mind to think differently. For example, what options do you have to practice farming in your compound? This can work for those struggling with budget to sufficiently meet the nutrition needs. Even without sufficient land, you can still get old sacks or used containers to create nursery beds that can enable you grow some vegetables. In the worst times, you can have some healthy options to feed your family, as you figure out how to source for more income. Giving up is not an option right now.

On the other hand, if you are still lucky to earn income periodically, you can manage this better by putting in place measures that enable these resources to stretch throughout the month, so as to meet your needs. One area to look at is the expenses side. It’s crucial that you weed out the wastage and enforce a strict budget for these items. If a budget item is not a life and death situation, it can be postponed up to a time when you are in position to afford it. Right now, you need to focus on how to get the best out of your shilling. Don’t forget the meal plans that allow you to manage your grocery budget better. Hunt for bargains and purchase long shelf-life items in bulk, where possible. Watching your utility usage to ensure your household doesn’t waste power or water, is a start.

With some savings derived from avoiding wastage, you can have room to restore some savings. These savings can be applied to different goals. Once they accumulate, then you are confident to look for opportunities to multiply and invest these savings. This will enable you to survive any emergency situation, which will hopefully be at a lesser magnitude as compared to the pandemic.

While we are working with a fluid situation, it is important to plan for all the current and future expenses. However, if you are in the habit of letting life just happen, you will always endure financial stress, particularly when dealing with unexpected events. A rule of thumb is not to let your lifestyle become one huge financial emergency that has no end in sight. It helps to work out contingency plans, which will help you to handle any unexpected occurrence better. At the same time, if you plan your finances in advance, you will make more rational decisions regarding money. However, if you are always in a crisis-mode, you will end up making questionable and poor financial decisions.

<<ends>>

2014: Don’t get caught out by bad maths

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By Sylvia Juuko

Every New Year accords you a fresh opportunity to improve the way you manage your money, particularly the habits that cannot be supported by your current financial state.

It’s also an opportunity to map out how to increase your earning capacity to support any expenses occasioned by your life stages. Some people opt for the old fashioned way of setting New Year resolutions, irrespective of the fact the year closes with no action taken on most items on wish-list.

Recognising the fact that listing down things hasn’t worked in the past, you can consider doing it differently this time round. For a change, set and list the desirable financial targets that are both short and long term, including timelines that are attainable.

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Time is not on your side

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By Sylvia Juuko

If delayed action is your habit, this may sound familiar. You may be struggling with your finances or you aspire to achieve a financial goal.

Despite the urgency, you convince yourself that you will pay attention to that aspect of your life later. Inadvertently, you get distracted by the so called rat race. And before you know, you haven’t acted on your promises.

The commonest excuse for not acting on our poor money habits is the mistaken belief that we have a lot of time on our hands. If you fall in this category, consider making the following changes.

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There is life after graduation

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By Sylvia Juuko

The graduation season is once again upon us, bringing with it the usual pomp and fanfare. For any graduate, parent/guardian, celebration is warranted to mark this achievement.

Like we all know, such celebrations bring a lot of financial pressure particularly if they were not planned for in advance. While it’s not my intention to rain on your parade, it’s crucial to remember that once all the dust has settled after the merry making, speeches delivered, drinks and food consumed, the graduates, guardians have to contend with reality.

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Money and emotions

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By Sylvia Juuko

Money evokes very interesting emotions. It can be a source of happiness, as well as stress. Emotions could be one of the biggest stumbling blocks to changing from your current to the desired behaviour regarding managing your personal finances.

Since your attitude towards money determines what kind of decisions you make, it is critical to get a mindset shift, particularly if you are in a financial state that is not desirable.

Researchers have discovered that your family background and values play a big part in how you will view and handle money.

As such, your current behaviour towards money may be traced from as far back as your childhood.

For example, if you are an impulse buyer, it helps to carry out some soul searching to discover if your emotional needs can be traced back to what happened in your childhood.

You may find that your quest to accumulate material possessions is your way of coping with some experiences during your childhood.

Whenever you are in a financial state that is not desirable, assess how the emotions play out.

Do you make poor money choices that ruin your financial well-being as a result of these emotions? Managing emotions behind money is what will determine your financial success or failure.

Remember that whenever you are making a financial choice, there is a trade-off. Having this in mind may help you focus on the fact that deciding to save as opposed to spending on an item that will not appreciate in value is more desirable.

If you are an impulsive shopper, you can opt for a cool-off period before you make that purchase.

I suggest you take a few days or weeks before you make a decision to purchase. You may change your mind when your emotions are under control.

Avoid making decisions when you are sad or anxious. You are more likely to spend if you are feeling low. In most cases, after making purchases with that state of mind, it is more likely that you did not need the purchases.

To help check this, track your cash flow on a daily or weekly basis.

You need to keep records of all your transactions either on your phone or in a notebook. Those that are receipted should be stored where you can easily access them for review.

Taking a hold of your finances and tracking your cash flow on a weekly basis is useful because you are able to relive your expenditure and income against the budget during the week. The beauty with tracking on a regular basis is that if you overspent during a particular week, you can redeem yourself before your money troubles are out of hand.

Another useful area to look at is what your biggest impulse spending is during working hours, whether at your own business or as an employee.

Do you purchase some stuff because your workmates are doing the same? Can you afford these purchases or you are trying to keep up appearances?

For any personal change to occur, you must be willing to delay instant gratification and get out of your comfort zone. For example, if you want to start saving for a future investment, you should be willing to forego a desired amount of money per month to make this happen.

Your ability to stay the course of action and ability to have will-power amid some initial discomfort and turning down invitations to spend to spend is what will set you apart from the rest.

Ultimately, if you can conquer your emotions and instead apply logical thinking whenever you handle money, you will be able to make the changes and improve your financial well-being.

The writer works with Bank of Uganda This email address is being protected from spambots. You need JavaScript enabled to view it.

(This article was first published in the New Vision)
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