10 Money Tips to Live By in a Challenging Economy

 

Photo by Microsoft 365 on Unsplash

According to the World Bank, Uganda’s economy is doing well, despite recent global economic pressures. Growth is projected to increase this year, driven by agriculture and services. 

Good news, that is on the macro-economic side of things.

But how does this translate for the ordinary Ugandan?

The latest FinScope Survery is more telling, and  reveals a more personal and less optimistic side to this economic outlook:

• Seven out of every 10 Ugandans are spending more than they earn  
•   Ugandans rely on their family and friends, personal savings and borrowing to cover their expenses
•  Only six in ten Ugandans keep track of the money they receive and spend
•   More than seven out of 10 Ugandans have no concrete long-term financial plans
•  Women’s access to financial products and services is low due to barriers including time spent on household tasks and care giving duties, and limited access to collateral for loans

 

The good news is, you can take small, consistent steps toward better money habits to help you navigate the realities of existing in this economy:

1.    Start by creating a budget

No matter the size of your income, and whether it is regular or irregular, create a budget to help you plan for every shilling you earn. Don’t wait to start earning more money to start; start with what you have.

Budget on a weekly or monthly basis and include a goal on savings. Financial experts advise saving 10% of your take-home income.

2.    Track every shilling

More than four in ten of us don’t track our income or spending! Knowing where your money goes helps you spend mindfully. For instance, do you really need to pay for both DSTV and Netflix?? Start tracking with a simple notebook, notes app, or Excel sheet.

Tracking also helps you cut “invisible” spending; those small, usually unseen expenditures such as impulse snacks at the office, data and mobile money charges that can quietly drain your income.

3.     (Prioritise) needs over wants

Priorities first, soft life later! When you need to prioritize your finances, your needs always come before your wants.

The budgeting process actually helps you determine your needs and wants. Things like food, shelter and healthcare qualify as needs, whereas wants are things like eating out or ordering food in, travel and entertainment. While drawing up your budget, first take into account your needs and then determine how much you can afford to spend on wants.  If things are really tight, consider cutting out wants until you are in a better position to spend on them.

 

4.   Build an emergency fund

Nine in 10 Ugandans are unable to cover emergency costs!

An emergency fund is money set aside strictly for unexpected, urgent expenses that you can’t cover with your regular income or other savings. For instance, fixing your car when it breaks down, or paying for a medical emergency.

Start with a mini-emergency fund and build it up. Set aside even UGX 5,000 weekly. An emergency fund can help you stop relying on borrowing to cover emergencies.

 

5.    Invest and grow your money

When we hear “investing,” we often think: “oh that’s for rich people”. But investing simply means putting your money into something that can grow over time. You can start with saving  as little as 10,000 UGX a week in a unit trust.

Ladies the Bibiina we belong to are good. Just make sure you join a group that has good leadership and is also involved in investing, and not just the monthly cash rounds.

Avoid:

• Ponzi schemes or “double-your-money” scams. (Looking at you Capital Chicken)
• Investing in things you don’t understand
• Borrowing money to invest.

 

6.    Automate savings and investment

Set up an auto-transfer from your bank account to savings. Apps like XENO let you invest as little as UGX 10,000. Being consistent is more important than the amount you are able to save.  Automating also saves time and money and leaves you free to focus on your other priorities.

 

7.      Harness the power of delayed gratification

In a world of instants (instant noodles, instant payments, instant loans, instant everything) it can be hard to deny ourselves selves the things we want. When it comes to finances, one of the most powerful tools we have is delayed gratification.

Delayed gratification is not about denying yourself, it is saying “not now” to something you want now, so you can focus on getting your finances right and then spend later.

For instance:

• Instead of buying a new outfit for every event, repeat outfits and put the money in your emergency fund.
• Say no to the latest phone if your current one still works—and use that money to grow your unit trust account.

8.     Debt is not your financial plan

Build your emergency fund, however small. If you must borrow, take on manageable debt, have a repayment plan and prioritize repayment. Borrowing to go to the bar, on holiday or to buy a new outfit is a no-no.

9.   Plan for the long game

Over 70% of Ugandans don’t have long-term plans. Ask yourself: Where do I want to be financially in three/ five /ten years? Write down that goal and start saving toward it.

10. Money management is a skill: keep learning

My first teacher was my mum; she taught me the value of saving by opening my first bank account when I was 15. I took a course on personal financial management  with Centonomy in 2021. I’m still learning every day.

Follow blogs, listen to financial podcasts, attend local trainings. The more you know, the more confident you become and the more equipped to protect yourself from falling for get-rich-quick schemes.

These tips won’t solve everything overnight, but they will help you move from just surviving to starting to thrive.

By Martha Songa

miss.songa@gmail.com