LESSONS FROM COVID 19 ON PERSONAL FINANCE.
The COVID-19 pandemic as an opportunity to learn crucial lessons on personal finance
When the first case of COVID 19 was confirmed in Kenya on the 12th March 2020, most of us had not foreseen the looming effects of the pandemic.
According to the Kenya National Bureau of Statistics(KNBS), about 1.72 million Kenyans were rendered jobless as a result. One year later, millions of people across the world have lost their loved ones, economies have stagnated as a result of inflation and lives continue to be affected as no solution is yet to be found.
Mary Wanjiru (not her real name) is one of the Kenyans who lost her jobs as a result of the curfew restrictions. She was forced to move out of her apartment after accumulating 6-month rent arrears that she is still not sure whether she will pay. Living in a middle-income estate in Nairobi with her 3 children, she has been forced to relocate to her rural home with her elderly parents as she figures out what to do next. A single mother with 3 school-going children, she wishes she had saved more or diversified her sources of income to stay afloat.
Like Mary, most employees worldwide have suffered pay cuts while small and medium enterprises that hugely contribute to developing countries' Gross Domestic Product (GDP) have been struggling to pick up the losses garnered from prolonged lockdowns and other restrictions like social distancing.
Amid the challenges, the current situation has brought to light valuable personal finance lessons we should live by:
5 FINANCIAL LESSONS TO LEARN FROM THE COVID 19 PANDEMIC.
- Have an Emergency Fund!
An emergency fund is a bank account with money set aside to pay for large, unexpected expenses.
Steve Down, CEO of Financially Fit Africa recommends having a separate account for this as it will keep you out of debt or burrowing through your savings, he adds that this will keep you off the financial treadmill through unplanned situations.
2. Diversify your sources of income.
Depending on one source of income can put you back on the cashflow scale rendering you financially unfit.
In the internet era, there are so many opportunities to make money online. Find out what really interests you and build a lucrative business around it.
You can join Financially Fit Africa’s online financial literacy programs to identify your set of skills and utilize them to guarantee cashflow!
3. Living on a budget is the way to go!
When you are sure of getting your salary every end month, you spend without a plan. The problem arises when suddenly organizations and companies suggest pay cuts over layoffs and it becomes a struggle to suddenly have to be conscious of your spending habits.
Living on a budget may sound restrictive but in the long run, it is fulfilling as you will not have problems readjusting to hard financial times.
4. Live a debt-free life!
What is your debt to income ratio?
High-interest debts like personal loans towards depreciating assets are harmful to your financial health regardless of your income.
Imagine if you were to lose your job today, would you still pay it on time? The piling interest rates can further sink you into debt that will damage your wealth heart.
Only borrow what you can pay in a month!
5. Get good health insurance.
More than ever, we have been reminded how important it is to prioritize our health.
Many Kenyans are a health scare away from poverty.
Public hospitals in Kenya have reportedly been overwhelmed by the number of patients streaming in for Medicare over this period. Health care is very costly globally, investing in good insurance covers lessens the burden that comes with unplanned circumstances.