The Covid-19 pandemic and the associated lockdowns over the two years have altered consumer spending habits all over the world. This has been brought by loss of jobs and livelihoods.
However, with the hope of vaccination, the lockdowns will be lifted and people return to their way of life, though not in a normal way. This is because some things such as zooming, social distancing, and working remotely will stay.
Against this background, experts advise that it is pertinent that Ugandans adapt to the new normal by dropping some of the following habits.
It has been a common practice for many Ugandan corporates to buy anything they come across. While scrolling the phone on Facebook, WhatsApp or Twitter, people come across all sorts of products being marketed such as trendy shoes, dresses, watches, and immediately order that they be delivered. Interestingly some of these items are luxuries, which the owners may never actually use.
Nataliey Bitature, a social entrepreneur, says: ‘Your habits now will decide what you want to be. If they involve impulse spending, then you will be broke,” she added.
Ms Bitature adds that if you have the habit of impulse shopping, then perhaps you should ask yourself these basic questions before purchasing; Do you already own something similar and has the same purpose? Will you regret it if you delay your purchase? And are there any cheaper alternatives to this item?
Otherwise, it would also be wise to sit on the intended purchase for a while. If it is something that you probably did not need, the impulse to purchase that item should go off.
Spending without a plan
According to Mr Joseph Byabazaire, chief executive director SEPSEL, an organisation that trains people in financial literacy, says across Uganda, 80 per cent of the people spend money without a budget.
“People go to the market and buy as their eyes suggest and do not sit down to plan short and long term budgets,” he says.
Mr Byabazaire says when you don’t have a set budget for the month, there is a higher chance of you spending unnecessarily. When you begin your planning, it is important for you to be aware of your needs and wants first. For example, if you are not saving as much as you would like because of your spending habits, then it is definitely time for you to take a step back and plan out what it is you truly need.
You spend money on things you do not need; if you do not really need it, do not spend money on it. It is okay to buy a new cloth or a new sofa set but ensure that you have actually planned for it and purchasing it does not encroach on your savings. Buying things you do not need at the expense of saving some money is not always wise.
Karen Axelton from Experian says during the pandemic, you probably reduced or eliminated many normal expenses. If you learned to handle haircuts, car repairs and manicures on your own, would you rather start paying someone else again—or keep doing it yourself to save money? You could keep running in the park instead of reinstating your gym membership, entertain at home instead of dining out, or ask to work from home instead of commuting again.
Treating debt as an emergency fund
There is no doubt that debt has become a part of our life. But Sylvia Juuko, the head of media relations at the Bank of Uganda, says unfortunately, lots of people borrow because money is available, with little consideration for the cost and their ability to repay. In addition, they borrow to cater for an emergency or to buy liabilities that do not add any value to their net worth. This means that income earners spend their entire working life paying off loans and get to the retirement phase still saddled by huge debt. Inevitably, this compels them to continue hustling during retirement to be able to clear the debt.
Ms Juuko says unless you practise responsible borrowing, debt can become a shackle, curtailing all your efforts to get ahead financially. Good debt is beneficial if used for productive purposes. This is possible if you can project how your income from the investment or other sources can be used to repay your loan. It is also important to consider your ability to pay this loan, the cost, as well as the long-term impact it will have on your finances.
Mr Charles Ocici of Enterprise Uganda says the borrower must know the purpose of the loan and where the resources for loan repayment will emanate from. Loans have no shortcut.
“Any debt contracted and one has no steady way of liquidating it, it disturbs your mind. As a professional, you will not be efficient, as a business you will not be focusing on serving the customer better. Scale down what created a debt so that you don’t try to plug this debt while you are creating another in a month,” Mr Ocici says.
Overspending on luxury/junk food
Barbecue or mchomo, chips and chicken are some of the junk foods craved by many people from all walks of life ranging from the corporate high end class to the lowest in society. Whereas these snacks taste great, they are not only good for your body but they are also expensive and unnecessary in the post Covid era. Besides, many Ugandans have a culture of feasting on huge amounts of pork and beer, especially on weekends.
Ms Juuko says this is not the time to maintain your old lifestyle. Given the fact that some of people are working from home, they could be tempted to spend more money on home deliveries of ready cooked meals and other items.
“This can push your food bill to the roof. Instead, focus on having meal plans and effect this by practising some culinary skills at home. This will ensure that the food bill is kept in check,” she says.
Unnecessary car movements
Many car owners have a culture of crisscrossing the city, especially on weekends, without any particular thing to do. They move around in the name of checking on acquaintances but experts say comes this comes at a big cost in the long run, in terms of fuel, airtime and other costs. They advise that once in a while, one can take a taxi or a short walk and avoid spending on fuel.
Mr Ocici says never imagine you are a source of livelihood to the survival of people. Teach people to start a living on their own. The limited resources that you have, ought to be channeled differently for them to start using for modest investments. Savings should be directed to vehicles of investment to create sustainable income.
“By 40 years, one’s side income should earn at least 20 per cent of your current salary. It is very risky to be independent on one source of income. By the time you are 45, earnings should be 50 per cent. At 55 years, income from your side hustles should be 150 per cent and you can choose to concentrate on your side income. Financial disruption is a delicate thing at old age because obligations continue to come in.”
Ms Juuko says typically, one other mistake that we make is to think that we have a lot of time on our hands, or that we are still too young to deal with money management. Remember, if you do not respect time, it’s inevitable that you will not manage your money well.
“The period of lockdown should be a training ground on how to efficiently utilise your time productively. Set goals on what you need to accomplish by the end of the lockdown. This period can be stretched to other timelines depending on what your priorities are. Use online resources, networks, books to cover your knowledge and skills gap. It will be a wasted opportunity to get out of the lockdown worse off than before,” she says.