YOUR FINANCE THIS SEASON

Initially, I declined making comments, primarily because I have never witnessed a health pandemic of this nature before. However, after much promptings, I dug into my finance theories bags, and came up with the following comments/forecasts:

1. Future Income
2. Expenditures
3. Debts
4. Assets/Investments

Future Income:
Whether you like it or not, your current level of income cannot be guaranteed into the distant future. Yes, for the next one to three months, but if this pandemic continues, I foresee organizations telling their staff that they can only pay half or quarter or zero salary until things get back to normal.

For this reason, my advice is that you should guard whatever money you have jealously because if the pandemic persists, many businesses will collapse, and the multiplier effects will be great.

As I write, some establishments have even asked their employees to commence some weeks of leave without pay. But then, usually, during or after a crisis like the one we are witnessing, new businesses will also spring up as learnings from the crisis. More people will be hired on part time basis and many businesses will be conducted on-line etc.

Expenditures:
Interestingly, expenses will be on the rise! The problem here is that fixed expenses like food items and medicines will continue to rise due to their scarcity. Other expenses like rent (for those in rented apartments), electricity, petrol, toiletries, etc. will also be affected. As simple and trivial as bathing soap or toothpaste are, their prices may also rise.

At this point in time, there is need to review your living/survival expenses. Frugal spending should take the place of reckless spending, proper/rational planning should be in place now. If you think the rain is going to fall for forty days and forty night but goes to ninety days and ninety nights, what will happen?

I tell family and friends to plan for a MINIMUM of six months. And if a solution is found to the problem that we are experiencing now (a vaccine), then the better for everyone.

Debts:
Taking and spending money borrowed is equivalent to spending future income today. With the prevailing global uncertainty, this is evidently the worst time to borrow ..., except of course for survival! For businesses, this is the worst period for borrowing and doing so will be tantamount to business suicide.

Any individual that borrows for the purpose of starting a new business or for expansion of its existing business may be in for a rough time. Except your business is in the food chain, and other essential or fast moving consumer goods (FMCG), then it will be unwise to borrow now.

Meanwhile, if you do not have money to stock your house with food under the current situation, please look for friendly loan to do so. However, a salary advance from the bank is not the right decision to make. I must also add that borrowing to invest in capital assets at this time is also not the right path to take.

Assets/Investments:
It is time to begin to reap what has been sown ... . It is also the time to sow slowly. It is the time to take a critical look at different available seeds and be selective in sowing them.

Some investments will continue to drop fruits despite this pandemic while some are already in jeopardy and their value nearly wiped out. Very soon, we will begin to see many tenants owing landlords (if you are planning based on expected rental income, please develop plan B).

We will continue to see the value of companies’ equity shares crashing, foreign currencies losing value etc. Be careful how you invest your money at this time so that you do not burn your fingers.

The general advice is to put your money in an investment that will at least retain its value even if it does not grow in.

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