There has been serious economic pressure since April because the Covid-19 pandemic forced tens of thousands of Kenyans out of their jobs and businesses. We have had people miss their rent payments with little to no confidence that they would be able to make the next month’s payment. The year is coming to an end and December could be worse because of the festivities and having to face family members that we have not seen for a while. The mental impact of this could be significant and the best way to pull yourself out of the shame and guilt of having to admit you lost your job or that you cannot afford the usual festivities is to first realize that you are not alone and that there is no shame in being affected by economic recessions.
You also want to downsize your life to fit your wallet immediately and again, there is absolutely no shame in that. Let the fear you feel inspire you rather than cripple you. Job loss could be a blessing in disguise as it pushes us to think out of the employment box and to map out our plan B’s because it is now clear to us that one source of income is too close to none. Realize also, that it is okay to ask for help and help doesn’t just come from the government. Call the people you owe money and request an extension and talk to close friends of family with regards to job or business opportunities.
Just because we are experiencing a global pandemic and possibly a long economic recession, doesn’t excuse us from doing intentional and proper financial planning for the year 2021. The year might be coming to an end but we still have another tough year to face and going into it with our eyes wide open is paramount for our survival. The first thing you want to prioritize is coming up with a budget and not just any old budget. It needs to reflect the changes in your income, expenses and it must factor in an expectation of tougher times ahead; which means that an emergency fund should be non-negotiable. Remember that coming up with a list of bills is not budgeting.
Budgeting is intentionally planning for your money and telling it where to go instead of wondering where it went at the end of the month. The best way to remain consistent with your savings even in tough financial times is to pay yourself first. This means deciding on a fixed percentage of your income that will be going into your emergency fund savings immediately on pay-day before paying any other bills. To protect yourself from having to have a monthly debate on whether to save or not, you might want to automate your savings by setting up standing orders with your bank. Ensure also, that as you do your 2021 financial planning, you map out expenses that you know without a doubt, will occur in your financial year. These includes items that occur on a non-monthly basis such as insurance payments, school fees, clothes for the children or your own wardrobe, travel and even Christmas. Doing projections of these amounts and dividing that amount by 12 months would ideally give you the figure you need to save into your sinking fund. A sinking fund is a savings account that is separate from your emergency fund where you save up for non-monthly expenses and short-term projects. You must plan for those items, failure to which, you will end up impulse spending.
Re-evaluating your goals is also very important because your finances fund your goals. Ensure that you align your money with your goals and if there were any changes to your income, ensure that you adjust your goals. With salary cuts, it probably wouldn’t be the best time to start that masters, buy that car or to take that vacation that you had projected for 2020. It would most definitely not be the best time to take on serious obligations such as mortgage loans. As you plan for these goals, ensure you have financial backing as to how they will be achieved, otherwise, it is just wishful thinking.