The New Normal, Financial Thinking

The Covid-19 pandemic has dealt a major blow on the Kenyan economy, as it is with the rest of the world. Unemployment has skyrocketed and the economy is still crippling back up from the initial fall ever since the pandemic. Some businesses are still locked-down, others have strict and limiting operating guidelines to follow.

The current financial uncertainties and the gloomy future ahead should be a stimulus for proper financial management. We cannot afford to live our lives normally; we must make serious changes especially on our finances.

“If we treat this disease normally, it will treat us abnormally”¬ Hon. Mutahi Kagwe.

Below are some of the tips on how to adjust to the new normal;

  1. Set Financial Priorities.

With the financial constraints occasioned by the pandemic, setting priorities and planning your finances will be vital to helping you stay afloat during the crisis. Identify and define where you want to be financially. Start by asking yourself some key questions; How has your revenue streams been affected? Is your income regular? What is your disposable income?  Likewise, do a thorough analysis of your monthly expenses to understand where and how you are spending.

When you have answers to the above, now plan your expenses accordingly. For instance, if your income is irregular, prioritize key bills and have them settled to cover months when no revenue is expected.

Give priority to basic needs i.e. food, health and shelter and cut down or eliminate nonessential expenses.

  1. Review Business Performance

Conduct a proper review and assessment of your business to understand the risk and potential impact of COVID-19 on your operations and financials and appropriate mitigating measures.

How has the Pandemic affected your sales income? How else can you sell your goods and services even with the current restrictions? How are your operation costs versus income? Are your goods and services still relevant to your target market?  What costs can you reduce during this season without hurting the production or service delivery?

Review your cash flow practices, take immediate measures to ensure the survival of the business in a low business environment, and in what is likely to be a strained credit market.

An honest assessment will guide you in making the right decision. Feel free to visit any of our branches for free financial advice before making major decisions.

  1. Negotiate your Contractual Obligations

Review all your contractual obligations and communicate with your contract counterparties on the potential impact of the crisis on your performance of the contract obligations, and possibly reach a consensual agreement on future performance.

Failure to honour your contractual obligations, especially when not communicated to the other party (s) attracts fines and financial losses.

Such contractual obligations include; existing loan (s) as well as Insurance policies.

We encourage our members with existing loan agreements and their ability to pay has been adversely affected to visit any of our branches so we can agree on how to vary the existing terms.

Customers who have existing Insurance policies like Education policy through Amica Insurance agency and are not able to meet their obligations should also write to us or visit any of our branches.

If you are in the transport sector and had paid premiums for 14 seater matatu, with the regulations in place on the maximum number of passengers allowed on board, talk to your insurer to have the premium reduced.

  1. Broaden your spectrum

Explore new ways of doing business. Kenyans are naturally very creative people; we have seen tailors shift from normal cloth-making to producing masks in bulk, Taxi men and women selling fresh groceries using their vehicles.

If you work in the Hospitality Industry which is the most hit, you can explore alternative ways of rendering your services. You can bake from home, offer outside catering services among others.

  1. Invest wisely

When you follow keenly what is happening around the world, you may be tempted to think this is a terrible time to invest but remember every cloud has a silver lining.

With money and credit getting scarce, you are likely to get good deals with people trying to sell off their assets to meet urgent needs. This includes vehicles, land and business premises/ventures.

There are also businesses that are thriving and you can cautiously venture into them or expand your existing business to match demand.

With a call by government for Kenyans to embrace cashless transactions, Mpesa, bank and Sacco agents have seen their daily transactions grow significantly. If you run such a business you could consider opening more shops or even taking short term credit to finance your growing demand for Float. We currently offer Float finance to such agents and loan is processed within minutes. Kindly call us on 0729333444 for application.

  1. Save for a rainy day

Covid-19 pandemic has taught us that the future is never certain. If your income has not been significantly affected, it is prudent that you set a considerable amount aside to caution you against any major economic changes in the future.

Money meant for school fees, transport, holidays and any other bills that you are currently not meeting should go to your savings account and not for expenditure.

Be willing to sacrifice now in order to provide for a better life for you and your loved ones in the future.

Need a friend to help you Plan Smarter so you can Live Better?

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