JuLy-

OPINIONS

Financial lessons from the covid-19 lockdown

MMAMOGODI MALEKA
07 July 2020

In our previous article we discussed the importance of savings and how a bad relationship with money can have long term impact on one’s financial wellbeing. In this issue, we will be discussing how the global pandemic caught many of us off guard. Covid-19 came as a surprise and when the President announced that that the country will be entering a nationwide lockdown back in March 2020, we were not prepared to face the impact of what this would have on our jobs and finances.

Our country has some of the highest unemployed rates in the world, with unemployment rate at 30%. Some analysts expect this to worsen even further due to measures taken by companies to alleviate the impact of the lockdown on business operations. A number of companies have been making announcements to reduce salaries and some to the extent of laying off their staff. The taxi industry, which is considered one industry that is safe when it comes to demand has also been hit hard by the pandemic. The industry took a huge knock when government imposed travel restrictions and reduced capacity, and as a result the industry had to increase fares in some parts of Gauteng. Those who rely on public transport to get to work on a daily basis have had to deal with increased transportation costs while their income has remained the same. With all these increased financial burdens, we still have to assist some of our family members who have lost their income as a result of the pandemic. 

So what can we really learn from the pandemic? Well, at a personal level, the global pandemic taught me a number of lessons; firstly, the lockdown made me realise how really important food security is at household level.  Secondly, I learnt that by simply having a job and a good qualification behind your bag is not enough to protect one from hitting the rock bottom. Really anything can happen. Lastly, I learnt that there are always opportunities even in the darkest moments in history. I have seen many young people who took advantage of the situation and somehow managed to earn some money. Those who work in the engineering space have designed and manufactured foot pump hand sanitizer stands, sold them and made some cash. Some are selling masks and hand sanitizers.

No one can deny that going forward things will have to change, our mind-set has to change completely. A good job and qualifications are not enough. We have to think beyond monthly paycheque. If you are in full employment, now it is the time think hard about alternative means of income. The unexpected global pandemic taught us that we can’t wait until we lose our jobs to think of alternative income streams. Diversity in terms of income streams is not only important for individuals but also important for companies. During level 5 of the lockdown, companies with diverse income streams still managed to generate income in other operating segments. So, in the event where we suddenly lose our jobs, we should still be able to generate enough income to at least cover our basic necessities.

With a huge portion of the South African work force taking salary cuts as a result of the unprecedented novel coronavirus, none can deny the importance of living below your means. Luckily, the hard lockdown introduced us to many ways in which we can reduce our monthly expenses. I did not realise how much money I’m spending by going out every weekend and buying take away almost daily. Some of the lessons learnt from this lockdown should change our finances for good.

Despite the fact that South Africa is in a net food surplus position, the reality is that many South African households are facing food shortages. This situation became even worse with level 5 of the lockdown when many households lost their income. Informal settlements are some of the communities which are hit the hardest by food shortage but luckily, a number of organisations and people were giving out food during this time. This surely unsustainable and given the expected job losses from the pandemic, the situation will get worse. These communities will have to find ways to grow their own food.

Despite the fact that South Africa is in a net food surplus position, the reality is that many South African households are facing food shortages. This situation became even worse with level 5 of the lockdown when many households lost their income. Informal settlements are some of the communities which are hit the hardest by food shortage but luckily, a number of organisations and people were giving out food during this time. This surely unsustainable and given the expected job losses from the pandemic, the situation will get worse. These communities will have to find ways to grow their own food.

Despite economic crushes globally, the information and technology industry continued to generate massive revenues. The virus created sudden demand for applications such as Microsoft teams and Zoom, while ordinary people found themselves spending more time on social media platforms. Another lesson from the impact of the virus on the IT industry is that opportunities are found in times of trouble. Even though we can be shuttered and hopeless about the pandemic has changed the economy, there are still opportunities out there and as youth it is our responsibility to identify these opportunities in order to turn around our financial situations.

Mmamogodi Maleka is a Chartered Accountant (CA) registered with South African Institute of Chartered Accountants (SAICA), a hiking enthusiast and a cyclist.