Vaccinate your finances
Safeguarding your financial health and wellness amidst Covid-19
19 August 2021 | Opinion
The coronavirus pandemic has been unprecedented in its effect, impacting every facet of daily life.
The ongoing third wave has been especially taxing on Namibia’s healthcare system, and on the mental health and wellbeing of Namibians at large. Covid-19 has forced us to rethink the way we work and the way we engage with one another. It has made us evaluate our health and all aspects of our wellbeing. It has opened our eyes and our hearts to the reality of death and the prospect of dying.
Equally, by imposing financial strain at all levels namely, at individual, family, business and national – Covid-19 has summoned us to create better balance in the way we manage our finances. It goes without saying that the financial impact of the pandemic has been and continues to be dire.
On a global level, millions of people have fallen back into poverty, undoing decades of socioeconomic gains. The United Nations notes that in 2020, the pandemic pushed over 71 million people into extreme poverty, negatively affecting the attainment of many of the Sustainable Development Goals (SDGs). This is further supported by other global research that has reflected a fear that the economic impact of the pandemic will make it harder for individuals and households to attain their long-term financial goals.
Saving for a rainy day
The Old Mutual Savings and Investment Monitor (SIM) survey results in 2019 already indicated that even before the crisis, many urban, economically active Namibians were struggling to save for a rainy day – let alone the difficult year-and-a-half as a result of the current pandemic.
According to the SIM survey, two-thirds or 67% of respondents indicated that they were either struggling to get by financially or just getting by; 64% noted that they had experienced difficulty in meeting their financial obligations in terms of paying bills and servicing debt during the past year; and only 37% had sufficient savings or investments to make ends meet for more than three months in case of lost income.
At the time, 81% of respondents were confident that their financial position would improve within the next 12 months. Little did they know what Covid-19 would have in store for them.
These pre-Covid stats are staggering, and the impact of the pandemic on individual and household financial health has added a further blow, let alone its impact on social daily life.
As Namibians, many of us miss living the normal African life since the outbreak of Covid-19, where men do a proper strong handshake, a check that your brother is healthy or the warmth of a tender hug with our wonderful sisters that restores the soul.
But all this has changed, reduced to cold elbows, fists and the like, with very little feeling – all these due to social distancing – a necessary measure in our daily toolkit to fight the spread of the pandemic. It is still a stark reminder that in the month of June 2021 alone, Namibia recorded 718 Covid deaths that increased to 1499 in July 2021.
Calls for help
At a national level, this simply highlights the fact that many Namibians had families devastated by the pandemic.
For corporates like Old Mutual Namibia, these are our employees, our customers and our communities. Because of this, many corporates including Old Mutual Namibia’s leadership, did not watch as the country calls for help to fight the devastating pandemic.
Old Mutual Namibia has supported various national initiatives to curb the effects of the Covid-19 pandemic on Namibians – contributing more than N$5 million to government efforts in responding to this national crisis in 2020.
The company is also part of the Vaccines for Hope initiative, adding N$1 million to private sector collaborative efforts to procure vaccines during a most critical time in Namibia’s fight against Covid this year. Old Mutual also joined hands with other private companies to procure medical oxygen required for the treatment of COVID-19 patients in our state and public health care facilities.
International research on the heterogeneous effects of the Covid-19 pandemic on households’ financial wellbeing and consumption points to various pandemic-induced financial concerns coming into play at the household level. Amongst others, these include current income, access to liquidity and accumulated wealth, as well as lower income expectations as a result of lockdown measures. Uncertainty about the duration of the pandemic and the potential economic impact of additional Covid-19 waves adds to further cause for financial concern in households.
Alongside placing a renewed lens on physical and mental health, the pandemic has also brought financial health and planning into stark focus. None of these aspects of our health should be left to chance.
In the same way that vaccinating ourselves promotes positive physical health outcomes by protecting against hospitalisation and symptomatic infection, ‘vaccinating our finances’ – as termed by Old Mutual colleague John Manyike, can help to safeguard financial health and wellness in the long term.
Navigating the storm
Although nobody knows for sure when the crisis will be over, or in what shape it will leave our finances, there are positive steps we can all take to safeguard our finances and strengthen our long-term financial well-being, while navigating this storm:
1.Stay focused on your financial plans and goals. Don’t let fear of the pandemic paralyse you or derail your dreams.
2.Be realistic and prepared to postpone some plans and goals. Distinguish between your non-negotiable goals and those you can postpone or modify to help ease the pressure on your finances now.
3.Identify ways to be smarter with your money. Sit down with your family to review your monthly budget and have an open conversation about expenses and luxuries that you need to cut out during lean times. Think about channelling those savings into an emergency fund for rainy days.
4.Settle your debt as quickly as you can. The less you owe, the lower your financial stress levels will be. Start by paying back your most expensive debts first (i.e. those with the highest interest rates).
5.Reduce your reliance on credit. It’s so easy to swipe now and pay later, but all those swipes can quickly add up to a large sum that incurs high interest and drags you into the debt trap.
6.Keep calm: this storm too shall pass. If your investment portfolio and retirement savings have felt the impact of volatile markets, it is important not to panic and remember to think long-term. Cashing in policies and investments could be a rash and risky decision you regret later.
7.Seek peace of mind. If you do not have a financial adviser, we suggest you make this a top priority.
There are several more ways to ‘vaccinate our finances’, to protect your long-term financial goals during times of crisis, and to withstand the uncertainty that currently prevails as a result of the pandemic.
Additional insights on how to manage financial health and wellbeing during these unprecedented times can be found here: (https://bit.ly/2Rv52JI).
*Ndangi Katoma is Old Mutual Namibia’s Executive: Marketing, Communications and Customer Strategy