Keep good money habits as economy re-opens

Taking charge of your finances in this uncertain economy calls for accumulating a healthy savings account and habits.   

With the full re-opening of the economy after nearly two years of closure to curb the spread of Covid-19, it is best to make the best of it (re-opening) by being realistic and sticking to the discipline you have learned.

A bee hive of activities is expected to resume following the full re-opening of businesses on January 24, 2022 across the country.

At this point, no one really wants to feel the tension of knowing that they are only a  paycheck or two away from monetary disaster due to lack of money to fall back on in case of an emergency. This may vary from a sick child to a car break down, job loss, disability or any other form of financial emergency.

However, financial experts and psychologists believe that with a little bit of saving, it will provide a financial backstop for life’s uncertainties and increase feelings of security and peace of mind.

This they say has to be utilised and lessons learnt as the economy re-opens and thrives to regain its original glory and stability.

 Mr Trevor Lukanga, senior manager in tax, business pricing at PwC, says, “With the re-opening of the economy, we expect to still see some laxity in expenditure initially because some uncertainty still lingers considering we now have the omicron variant, not sure what will come next.”

“In the past two years, the pandemic has taught us to be more frugal. In order to make the best of the re-opening, people should spend their money on necessities, opening the economy should not mean reckless expenditure,” Lukanga says.

He adds: “We all have developed some good spending habits during the past two years; be it with home expenditure, that journey you don’t need to make, a report you do not need to print out among other things. These good habits should now be practised and made a part of our lives.”

The lessons are not limited to age, gender or class.

 “Whether the discipline was developed out of genuine self reflection and deliberate effort or as a result of one being ‘forced’ into the discipline out of a crisis, we should now all be deliberate in sticking to the good habits learned,” he explains, noting that some of these habits have provided more convenience and stability both financially and socially.

He calls for the need to be more frugal in our spending but also remembering  to save for a rainy day because “we now know how unpredictable the future can be.”

Mr Martin Nsubuga, the chief executive officer of Uganda Retirement Benefits Regulatory Authority (URBRA), says opening up is expected to have a positive impact on domestic consumer demand, production and employment.

 “Government has put forward emergency lifelines to support businesses and workers. We are optimistic that employers and employees will actively make contributions in their respective retirement benefit arrangements,” Mr Nsubuga says.  

He adds that closing of the economy did not change the need for the working age Ugandans to plan for retirement.

 “Regardless of one’s financial experience with the Covid-19 pandemic, it is a call to savers to take steps that will ensure financial preparedness for retirement and to minimise potential future financial hardships,” he elaborates.

 According to a study by the Northwestern Mutual insurance company, savings is linked to increased happiness.

Plan

The study indicates that people who are planners and do future-oriented things such as setting goals and taking steps such as saving money to achieve those goals feel happier and better about their lives than those that do not make plans.

 Remaining realistic amid tough times

 Mr Nsubuga notes that as we move into recovery, people must not forget that fighting the pandemic is central to full recovery. 

“The coronavirus pandemic affected older persons disproportionately. It exacerbated an already troubling societal retirement saving shortfall, and some workers are looking to long-term retirement savings to solve short-term financial problems,” he adds.

 However, he quickly notes that it has driven home the need for financial planning and security.  We therefore must direct more attention to emergency, retirement and inheritance planning.

 The combined impact of the pandemic and the lockdown has had a range of financial consequences which significantly reduced money in hand.

 He further adds that while the Covid-19 impact set some retirement savers back, it has enhanced their resolve to increase access to and use of retirement programmes to cater for old age contingencies.

Mr Patrick Kivumbi, counselor with the Dorcus Faith Ministries, says people need a strong relationship between spending and saving plans or creating an emergency fund.

This is mainly for low-income individuals, those with a spending plan with goals were far more likely to have saved money for emergencies than those without a plan.

“There is a sense of control that people have when they plan ahead and know what they need to do to get from where they are now to where they want to be,” Kivumbi says.

In addition, people who feel a sense of control over life events are often happier, cope better, and are more resilient in times of stress than others. Conversely, people are especially unhappy in situations where they perceive themselves to lack control.

Be frugal

There is need to be more frugal in our spending but also remember to save for a rainy day because “we now know how unpredictable the future can be.” There is a sense of control that people have when they plan ahead and know what they need to do to get from where they are now to where they want to be.