THE RISE in cases of COVID-19 has already caused economic fallout across the globe, and the forecast is for the situation to worsen. Efforts to contain the spread of the highly infectious disease have caused a surge in business closures, resulting in the loss of jobs in a variety of industries, including tourism and hospitality, which comprise hotels, restaurants and bars. Airlines and business process outsourcing facilities have also been affected.

Rose Miller, head of the JN BeWi$e Empowerment Programme, said consequently, the number of Jamaicans feeling the financial strain in the short and medium term is significant and likely to climb even further as the real impact of the pandemic unfolds in the months ahead.

The Ministry of Finance and the Public Service has revealed that it received just under 500,000 applications for the various financial assistance packages for Jamaicans facing financial hardship as a result of COVID-19.

“This is not surprising,” remarked Miller. “Many Jamaicans were living from pay cheque to pay cheque even before the pandemic. This means they have little or no savings to cover unexpected expenses. A crisis of this proportion only makes matters worse.”

She noted that while the Government has implemented several initiatives, including the COVID-19 Allocation of Resources for Employees programme, designed to cushion the economic impact of the pandemic and to put cash in the hands of the most vulnerable, receiving one-time payments is only a short-term solution.

“It is a time for everyone to ensure that they are making wise financial decisions. Further, this is why financial education is so important for a nation,” she said. “It is this awareness and practice that will help Jamaicans to successfully manoeuvre the financial landscape, which can be quite complex during times like these.”

Miller said that with April being observed as Financial Literacy Month, it is an opportune time to focus on the importance of financial literacy and to provide practical ways to help people cope.

Miller, who is also grants manager at the JN Foundation, is reminding Jamaicans to revisit the idea of using a budget. “This is an effective money-management tool which can help us achieve our financial goals. For many facing hardship imposed by the current pandemic, the goal right now is simply to be able to purchase food and pay existing bills,” she said.

The financial education expert suggested a few steps people can take right now to manage their budget wisely, while awaiting a return to something like normality.

START WITH YOUR INCOME AND ASSETS
She informed that there are two sides to budgeting: income and expenses. “The first step in crafting a budget at this time is for persons to assess whether the household income has been affected by job loss, lay-off or reduced hours, all of which would reduce the amount of money the family has to spend,” she advised.

“This will give you an idea of how deeply you’ll need to cut your budget. Though it’s not an ideal situation, succeeding financially through this crisis demands a lifestyle adjustment to the new realities, such as cutting down or cutting out certain expenses altogether to stay afloat. Therefore, a realistic family budget should be a critical part of your coronavirus response strategy,” she stated.

Miller noted that for people who were able to put away some savings and create an emergency fund, they can now tap into this resource. “Ideally, you should have an emergency fund that can cover three to six months’ worth of expenses. If you have other forms of investments, these can also be used to shore up your income.”

TAKE CARE OF THE ESSENTIALS
The JN manager further advised persons to prioritise their spending to take care of the needs of the family. “Start with what’s likely your biggest expense, which is housing. If you’re a homeowner, there may be a silver lining amid the coronavirus crisis, in that many mortgage lenders are offering their customers relief at this time.”

Miller advised persons with outstanding mortgages to reach out to their lenders. “They can walk you through what your options are for reducing or suspending your mortgage payments temporarily. It is a good idea to accept this assistance, as it will boost your cash flow.”

Another consideration is for homeowners to refinance their home loan. She said that with mortgage loan rates at or nearing historic lows, it may be an opportune time for persons to refinance their mortgage at a lower rate. “That should curtail the monthly payments and save you money on housing costs,” she explained.

Miller said renters may not have the same level of flexibility. “Ideally, you should continue meeting this obligation to avoid eviction, but if you can’t because your income has taken a hard hit, speak with your landlord to see what arrangements can be made.”

She added, “As everyone tries to cope with the current crisis, having a good level of financial awareness and knowledge will be beneficial to navigate the financial spaces by seeking various solutions to help you weather this financial storm.”

See the original article here!