With April being observed as Financial Literacy Month, banker, Nickeisha Cleary, is reminding Jamaicans that prioritising and protecting their financial health, amid the COVID-19 pandemic is vital.
Miss Cleary, who is assistant manager, mobile banking at JN Bank said that if more persons have a solid handle on their finances, they will be better able to withstand the impact of the pandemic and also be better prepared for a post-COVID 19 economy.
Miss Cleary was addressing a recent financial awareness webinar hosted by The University of the West Indies, Mona Library and the Mona Library Health and Wellness Committee (LHEWco), which was held under the theme: “Navigating through Financial Crisis – There is Always Hope”.
“Throughout this tumultuous period, your health is obviously the number one priority. You can, and should, make your best efforts to stay healthy. However, maintaining your financial health during this situation is also of great importance,” Miss Cleary said.
She noted that with COVID-19 at the forefront of everyone’s mind, it’s normal to feel uncertain about many aspects of life, including your finances. “Even if you don’t catch COVID-19, you could be financially impacted by the fallout,” she said. “That is why it’s more important than ever to think about saving money and planning for a stronger, post-pandemic recovery.”
The assistant bank manager noted that even amid such great uncertainty, there are still ways for Jamaicans to save, get control of debt, and boost their financial well-being.
She suggested a few ways how persons can keep your finances in order as the COVID-19 situation continues:
Be Intentional About Budgeting and Saving
Miss Cleary pointed out that one of the first lessons of financial management is to keep a sharp eye on one’s spending. In doing so, it is important to be deliberate about budgeting by putting things down on paper, not just making a mental note of what you spend.
Categorise Your Spending
She advised that after making a note of all your income versus expenses, persons should carefully assess their expenses and categorise them into fixed, variable, and discretionary spending.
“Fixed expenses, such as your rent, remain the same from month to month and thus often constitute the basis of your budget. Variable expenses, such as utility bills can typically be lowered with behavioural changes like turning off the lights as you leave a room, and discretionary expenses consist of wants rather than needs and provide the most opportunities for saving,” she said.
Pay Yourself First
Miss Cleary recommended that persons should think of their savings just as they would any other bill. “When your electric bill comes due each month, you make sure it gets paid. You need to treat saving money no differently. If your goal is to save $10,000 a month, then think of your savings goal as a $10,000 bill that needs to be paid,” she said. The banker pointed out that if persons think about saving in terms of a bill that needs to be paid, they’re more likely to put that money aside.
Make Saving Automatic
She further noted that just thinking about monthly savings as a bill isn’t enough. “You need to create an automatic savings plan that will routinely deposit money into your savings account before you even have a chance to spend it,” she added. This can be done right through your employer’s direct deposit or via a recurring transfer with your bank. This way, you won’t even miss the money going into savings each month and yet your savings account will begin to grow over time.
Spend Less Than You Earn
Miss Cleary said this is the holy grail of personal finance. She said persons have to spend less money than they earn, and there’s no way around that. “It’s all about cash flow,” she explained.
“If you earn $100,000 and spend $110,000, you’re now at a $10,000 deficit. To cover the extra $10,000 spent, you might borrow from a credit card. Unfortunately, the borrowed money comes with an interest cost, which means you’re more than $10,000 in debt,” said Miss Cleary.
“If you continue this process on a regular basis and with large dollar amounts, you can get into tens of thousands of dollars in debt. You, therefore, need to be mindful about your spending and this is where your budget comes into play,” she said.