By Sylvia Juuko

How you react during a period of uncertainty often determines whether you will be swallowed by the circumstances or be left standing to pick up the pieces in the aftermath.

The pandemic, whose expiry date remains unknown and the attendant lockdown episodes, is certainly not for the faint-hearted. The loss of lives, health challenges and costs have tested not only our mental health but also seen our personal finances and businesses take a hit.

That notwithstanding, it is crucial that we manage this precarious situation by ensuring that we not only deal with the challenges to our mental health but also manage to remain focused and resilient in order to survive and rebuild what has been depleted.

In normal circumstances, we make money mistakes that keep us stuck or set us back from our financial aspirations. Consequently, the dilemma we are grappling with is whether it is possible to avoid making mistakes in an environment where it is easy for the panic mode to become a default setting. It is not easy to stay clear-headed, but it can be done if we aim to do so.

One way to deal with this scenario is to identify the areas that continue to keep us stuck and not able to implement our financial goals. Even under these circumstances, we need to train our minds to be set in a solution mode. For example, how can we use this time of restriction to productively think beyond the current peculiar circumstances?

While mulling over what can be done, it is equally important to look out for the mistakes that set us back from achieving our financial goals.

In no particular order, here are some of the most common ones.

BOGUS INVESTMENT SCHEMES

When the situation is uncertain, it’s tempting to look for shortcuts to wealth accumulation. The quest to fix our money issues quickly and, in most cases, without breaking a sweat, will make us vulnerable to bogus investments and con artists.

The promoters of these scams capitalise on your greed and anxiety to take even the little money you have. They know that once they promise you above the market returns over a short period of time as a bait, you will be hooked. In most cases, the money you are asked to ‘invest’ is initially doubled. Once you get this money, it will give you false confidence in the scam. You will automatically hand over what has been ‘multiplied’ plus some more money, banking on the hope of cashing in. Once a multitude of people reinvest, that’s when the next instalment disappears and the cat and mouse games commence.

Eventually, the promoters will close shop and leave a multitude of victims in their wake.

DEBT AS AN EMERGENCY

Another common mistake we make is to treat debt as an emergency fund. There is no doubt that debt has become a part of our life.

However, unless you practise responsible borrowing, debt can become a shackle, curtailing all your efforts to get ahead financially. Good debt is beneficial if used for productive purposes. This is possible if you can project how your income from the investment or other sources can be used to repay your loan. It is also important to consider your ability to pay this loan, the cost, as well as the long-term impact it will have on your finances.

Unfortunately, lots of people borrow because money is available, with little consideration for the cost and their ability to repay. In addition, they borrow to cater for an emergency or to buy liabilities that do not add any value to their net worth. This means that income earners spend their entire working life paying off loans and get to the retirement phase still saddled by huge debt. Inevitably, this compels them to continue hustling during retirement to be able to clear the debt.

PLAYING THE VICTIM

Playing victim is also common with people who want to create excuses for the financial mess they may be experiencing. It is important to focus on how to solve the financial issue you are grappling with as opposed to focusing on how you think you have been dealt a bad hand.

Thinking big and trying to seek advice and help to improve your current circumstances is a better utilisation of time. You have to cultivate a sense of confidence in your ability to generate more income and work towards that.

Options to consider include whether this income will be realised faster by trading your skills or if your current savings can be invested in an asset to fetch you a return.

This will entail getting out of your comfort zone to try something bigger and having a long-term view. If you are used to short term instant gratification, shifting your mindset takes some work. Nevertheless, focusing on increasing income, seeking opportunities to invest and hunting for the resources needed is more productive than playing the victim.

DISRESPECTING TIME

Typically, one other mistake that we make is to think that we have a lot of time on our hands, or that we are still too young to deal with money management. Remember, if you do not respect time, it’s inevitable that you will not manage your money well.

The period of lockdown should be a training ground on how to efficiently utilise your time productively. Set goals on what you need to accomplish by the end of the lockdown. This period can be stretched to other timelines depending on what your priorities are. Use online resources, networks, books to cover your knowledge and skills gap. It will be a wasted opportunity to get out of the lockdown worse off than before.

The writer works with Bank of Uganda