The Bank of Namibia’s latest Economic Outlook expects the Namibian economy to fall into a deeper contraction during 2020, mainly due to the devastating impact of COVID-19 across all sectors.
This means that as we conclude the year, we will be faced with a few challenges. For some, it means having taken a drop in their salary, while for others, a total loss of income. Few are fortunate enough to still have a job and have their income unaffected. What these times of uncertainty have taught us is that having savings for emergency situations is critical.
As we approach World Savings Day, Saturday, 31 October, the question is, how do you start saving, and is this possible during these times? The following are a few likely scenarios to reduce costs and help you to save money:
Look at your budget: The best way of starting a savings plan is to take control of your finances by drawing up a budget. A budget takes into account your income and expenses over a specific period. It will give you clear indication of how and where you spend your money. Keeping track of your expenses for about three months, shows you where your money goes. While doing this exercise, be honest with yourself. Budgeting takes discipline, but the rewards are worth it. After tracking your spending for a specific period, you will see a clear pattern of where your money goes, ask yourself where I am spending money and why? Once you have these answers, start changing your spending behaviour by cutting down on unnecessary spending. For instance, if you eat takeaways three times a week, reduce it to once a week.
Pay yourself first: There is no such thing as ‘I will save when I have the money to do so’ or ‘I will have something left to save after paying for everything,’. Instead, look at paying yourself first as a vital part of budgeting. Open a savings pocket attached to your Bank Windhoek Selekt Gold Account, for example just for your monthly savings and transfer your budgeted amount every month. Start small, with two percent of your salary for example, and as you reduce your spending on things like take-away dinners, start adding what you would have spent on those dinners to your monthly savings plan. Soon, you will see your savings grow as you reduce your spending on certain items.
Needs versus wants: Assess your needs and wants. A need is necessary to survive, while a want is something that people desire to have. Some examples of wants are designer clothing, expensive entertaining and upscale dining, which are not necessities. During this period, your needs are medication, food, water, clothing, and shelter.
As you assess your needs, ask yourself how best you can meet those needs to decide where you are going to spend your money and where you should cut back. For instance, in the time of COVID-19, your health is your wealth and priority should be going to paying for food, medication and good quality supplements to keep your immune system strong.
Communicate with your creditors: If you foresee any payment obligation challenges, contact your financial institutions like Bank Windhoek for possible relief. The Bank has a case-by-case relief measures implemented as part of its initial response to COVID-19.
Keep your electricity and water usage in check: To save some money on your water and electricity bills, do the following:
• When not in use, unplug electronics such as cell phone chargers, television sets, and coffee makers that use light-emitting diodes (LEDs).
• Take shorter showers; check for any water leaks throughout the home and have them fixed.
• Use Bank Windhoek electronic service channels such as the Bank Windhoek Mobile App, Internet Banking, EasyWallet, and Cellphone Banking, for the convenience of purchasing electricity, sending money, and other transactions instead of leaving home to pay for these services in person.
Home cooking and packed lunches: Meal planning and shopping only for the items you need to prepare your meals is a good way of saving money. Plan to shop for items only once a week and stick to a shopping list. Daily spending should be limited to fresh bread and milk only. Packed lunches could be leftovers from the evening before or sandwiches prepared at home. This is also a more nutritious approach for your family since you control the levels of things like salt, fats and sugar in your cooking.
Shop in bulk: Keep a look out for special prices at supermarkets and in conjunction with your meal plan, buy non-perishable items in bulk. Limit your trips to the shops, to save on transport expenses.
Involve the family/partner: If you are embarking on this road of financial independence, involve the whole family, or your partner our housemate in your journey. They will have to know your goal so that they can lend their support. This is, after all, a team effort.
The COVID-19 pandemic has made us relook our relationship with money. The pandemic reminds us of the importance of saving, which helps protect us from a financial emergencies during challenging times. Give the above hints some thought and make a change, so that when in times of trouble, your saving helps you financially.
* Samuel Linyondi is a Corporate Communication Practitioner at Bank Windhoek.