Half year money assessment

Personal finance by Sylvia Jjuuko

For most income earners, the second half of the year feels like it has come too soon, while for the rest, it seems like just another day.

The pandemic-induced lockdown has derailed most annual personal financial plans, making it necessary to go back to the drawing board.

The half-year period can be a good way to gauge whether you are on course to hit the milestones that you projected at the beginning of the year.

If you have nothing to show, do not beat yourself up, there are still six months to play catch up. On the other hand, if you are on course, you should celebrate drawing a foolproof financial plan.

If you already have a rolling plan, it is just a matter of tweaking a few items to align them with your current financial status and life cycle.

Your financial status can be arrived at after computing your assets vis-à-vis the liabilities.

Certainly, if you have a negative net worth, it is highly likely that the debt you incurred prior and during the pandemic period has taken your financial plan off the rails.

That said, anyone who managed to negotiate some credit relief with their lender should recognise that this is a temporary measure that requires figuring out how best to meet their obligations before the grace period elapses.

On the other hand, if your credit history is positive, then leveraging credit to acquire assets that fetch you extra income should be your next option as you race to meet your investment goal before the year elapses.

Getting back on track will require mental fortitude in the wake of an uncertain environment. Your attitude will contribute to either stagnating or moving ahead financially.

My discussions with different categories of income earners indicate a split between pessimists and optimists. Predictably, pessimists think there is no way out of their current financial quagmire.

Optimists, on the other hand, are fired up and are focusing on seeking opportunities to move away from the temporary setback in their finances.

This attitude helps you recognise that some assumptions can fall short. When you are making plans, you need to anticipate risks from the external environment.

While this level of disruption had not been factored in, in your plans, it is a risk nevertheless. A positive attitude perceives this as a challenge that can be overcome.

More importantly, thinking about saving at a time when you are barely making ends meet may feel like a far-fetched idea.

If you are still lucky to earn income, there is no better time to set aside a percentage of your earnings towards specific goals.

Even if this means saving sh200,000 per month or below, it is better to start or continue with the percentage you targeted at the start of the year. It should not be considered too little to make a difference.

By the end of the year, you will have at least sh1m in savings, giving you an option to invest as opposed to having nothing to start with.

Consistent saving allows you to improve your financial life while getting ready for uncertain times. Saving gives you more options as opposed to just a single primary income source.

For example, anyone who previously had a savings goal to shore up their emergency fund did not have issues surviving during the lockdown.

The only issue they have to deal with right now is to replenish what has been eroded.

This puts them in a better financial position as compared to those who lacked one and have dug themselves into more debt by borrowing to finance consumption.

Any income earner who is still grappling with impulse buying needs to change behavior during the next half of the year.

To make progress in your financial journey during the next half of the year, you cannot avoid a considerable amount of discipline and thinking long-term. You have to weigh the impact of instant gratification and longterm happiness.

Train your mind to forego that purchase that will probably give you temporary relief and opt for setting that money aside to beef up your investment plans. You have to proactively work towards delaying those expenses that are not particularly life-threatening.

Until you get to the desired footing, prioritize expenses that are needed to survive and anything else can be foregone.

Unless you get used to financial discipline, it does not matter if you have the best well-laid-out plans.

They will remain a record of a beautiful list of to-do items that are part of your stationery.

Critical to achieving your financial plans in the next half of the year is figuring out how you are going to supplement your current income.

You have to become more aggressive in seeking opportunities that can earn you extra income.

For example, re-examine the networks you patronise, continue to engage mentors that you want to emulate, and dedicate specific time towards this goal of earning extra income.

In addition to that change, learn new ways you do things that will create a change in your bottom line.

Ultimately, look at the next six months as critical to achieving that much-needed reset of your personal finances.

Do not forget to have a long-term view that will see a set of actions that get you to your goals by the close of the year.

The writer works with Bank of Uganda