Is your strategy working?

PERSONAL FINANCE |SAVING|FINANCIAL FREEDOM| MONEY MATTERS

When uncertainty becomes a way of life, you have to become ingenious in managing your personal finances. The pandemic is showing no signs of abating, which means that if you had relaxed the level of preparedness, now is the time to step up and configure your personal finances to cope with the unfolding aftermath.

Given the experience you have collected since the beginning of the pandemic - induced lockdown, you have probably found your financial bearing and know what to work with to achieve financial security you desire going forward. As it is, if there are any lessons to learn from the pandemic, it is that we have to manage our finances well to be able to cope with what has been thrown at us. Managing finances well takes discipline, which is a useful habit to adopt to be able to cope with these unusual times.

Typically, when the Government announced the partial lifting of the lockdown, some people resorted to their old ways of not keeping a handle on their finances. However, you need to get back on track and maintain financial discipline. One of the things that you have to keep repeating more times than in the past period is to increase the number of times you review your financial plan to suit the current conditions. It is unwise to wait for the traditional quarterly reviews when a money issue needs to be urgently addressed.

Consider once again whether your financial plan still matches your lifestyle and goals, among others. In this case, what you must address is whether your plan still makes you aspire to move from your current situation to the desired one. At the same time, consider identifying the hurdles that you have to overcome to get to your ultimate goals. With that assessment, consider whether the lockdown helped you save more or spent more.

If you made some money mistakes, the aim should be not to repeat them going forward. For example, did you save during this period regarding transport or fuel, healthcare and education? At the same time, where did you register increases in your budget? Going forward, during this time of semi-lockdown, focus on your spending trends and identify the discretionary expenses that you have to cut back on. Even the essentials that you need to spend on to survive have to be assessed to ascertain whether there is room to cut back.

The other advantage of analysing your spending trends is that it enables you to catch deviations from your plan and rectify them early enough. Once you have addressed that, turn to your earning capacity, whether there is room for improvement and how this is affecting your current level of cash fl ow.

If your current income is less than what can finance your lifestyle, then look for ways to expand your means. If your income can cover necessities and still leave room for saving, remain consistent with this goal. The value of saving has been apparent during the lockdown. Many savers have not dealt with financial pressures because their emergency funds have cushioned them from any shocks to their income. These funds have to be replenished, that is why you need to figure out the right savings vehicle to achieve this goal.

This period should have exposed whether you had the right portfolio mix. For example, aim for a portion in assets that are near cash assets for easy access to liquidity when needed, long-term government securities for goals that have a long-term horizon (such as education, retirement), real estate and ventures that provide constant cash fl ow.

If you did not get it right, you may have found yourself starved of cash fl ow because your investments have tied up your money. Now is the time to get it right in line with your goals. At the same time, you could have taken undue risk that has resulted in some limited or no returns. You should determine whether you need to count your losses and move on to something else. Remember that if this seems complicated, you can request for advice from independent personal finance advisors to streamline your financial plan to match your current resources, goals and lifestyle needs.

The writer works with Bank of Uganda Personalfinance222@ gmail. com