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Op-ed: What do financial injections mean for us?

- Phindile Khulu

There are pros and cons to the financial measures brought in to provide relief and stimulate the economy

The financial measures brought in to provide relief and stimulate the economy mean something different to individuals and to the country. What may be most attractive to us as individuals is the drop in interest rates and increased government financial assistance. This injection of funds into economic activity will likely lead to many people taking out more loans, and hopefully starting new businesses and having more funds to spend. For some of us, stress levels will drop as there will be a return to feeling in control of our financial lives.

Institutions will, however, also use this opportunity to try to sell us property, insurance, cars and many other products and services. These businesses will be trying to bridge the financial gap caused by the lockdown in their operations and they will be looking to come up with new, revised marketing strategies to attract more people. Though these strategies will indeed look attractive from the outside, they will not necessarily benefit all of us. Many individuals will be given credit despite not having good credit scores, which may get them further into a debt spiral. As with businesses, many individuals did not have enough time to prepare financially for the lockdown, and we also have our gaps to think off. Let us not fall prey to strategies that assist businesses to recover at our own expense.

This is not the time to change our standards of living. Yes, the financial injection might give us a sense that we have more money in our hands. We may have been caught off guard by lockdown and the pandemic, and we may not have had much opportunity to save beforehand anyway if we largely live from hand to mouth. We are always busy with hardly any time to make calculated assessments of our actions and decisions. The lockdown has forced us to pause and think, and we need to maintain this trend.

We also need to shake off some of our old bad habits. We have proof that the unpredictability of our circumstances requires finances. As we tap into the financial assistance provided by the government, we must think creatively on how to get long term financial rewards. We must not act hastily but carefully and with our long-term goals in mind. Options must be weighed up. If we have a choice between cooking daily or purchasing ready-made meals, paying gym membership fees or exercising at home, working from home or travelling to the office. The list goes on. Each one of us must look at our individual situations and be certain of what will be possible and beneficial for us financially.

We must only take what we need from financial institutions and remember that these are relief measures – they do not take away the responsibility of paying back the money we owe. In fact, ‘reliefs’ like payment breaks may increase the responsibility from prolonged debt term and the increased interest from the unshrinking capital.

On the other hand, we could take the opportunity of reduced interest rates to pay off our debts quicker. If we can, paying the same amount we are used to and also paying more where we can will make a huge difference to our debt in the long term. In doing that, we are opening room for other opportunities that would require cleaner debt profiles down the line. Irrespective of the amount, we must start up pots of funds for rainy days. This should become our business as usual. As individuals, let us think like businesses when it comes to finances. After all, we are selling our services to our employers and the businesses we operate.

Individuals should also start thinking about opening businesses with good prospects of success, to avoid acquiring capital for a business that will not be seen through. As we start new ventures, we must consult trusted sources. These services may be received free of charge, from our peers, organisations and online. While we are on lockdown, we must think of benefits for working from home so we start motivations with employers as soon as we can. The main idea is to stay safe, save time, cut costs and increase productivity.

We must always remember that the financial injection is not a salary but a loan. Regardless of how the financial injection is received, we must not lose sight of the fact that loans must be returned with interest. As for our salaries, we have already worked for them, we paid with our time and other resources. Its receipt is not real time with the services provided.

When lockdown ends, wouldn’t it be to our benefit if we could come out of it thinking differently about how we work for and save our money? To do this, we must initiate and maintain healthy habits now. In doing so, we will definitely see a favourable change. That can avail money and time to be used for other beneficial activities and long-term goals for ourselves and our families. Let us find a path of recovery together with our country’s economy. We must only get loans when we need them. Agree to payment breaks when we need them. Where possible, get confirmation that there will be no penalty for any payment breaks. Be safe, be wise.