The Covid-19 pandemic is ruining our livelihood.
This year began with a promise of strong economic growth, not only in Nigeria but around the world.
The International Monetary Fund projected in January that the world economy will rise by 3.3 percent in 2020. The World Bank projected that it will rise by 2.5 percent.
Fast forward to June, after we have seen, hopefully, the worst of Covid-19, the economic outlooks became dire. All the growth indices now read negative. The World Bank predicts that the global economy is likely to contract by 5.2% in 2020 and the IMF forecast is a contraction of 4.9%.
It’s not looking good. Unemployment is high and at that, people are still losing their jobs. Prices of goods and services are rising. Our ever unstable exchange rate has gone down once more worsening the situation of the general price level.
And we don’t know if we have seen the worst of it.
So what money lessons have we learned from the Covid-19 pandemic.
Always Have Emergency Fund
If you have lost your livelihood in this sad time and you don’t have an emergency fund, only God knows how you will survive.
This is the time that we understand the true benefits and worth of emergency funds. They help us pull through difficult times. As long as the world remains uncertain, emergency funds remain very important.
The worst is that you can’t help yourself and family and friends won’t be able to help you either because everyone is struggling for their heads to float on this sea of economic ruins. This is why it’s a personal thing, something you do for yourself to always have a balance on your financial life.
Never Ever Rely on One Income
The conditions created by the Covid-19 pandemic have shown us that relying on a single income is a big mistake.
People have lost their jobs. The transportation industry was completely shut down for almost four months. Organized markets were shut down for a month or so before they were allowed to trade intermittently. Schools are shut down so teachers, especially those of them in private schools don’t earn anything unless you are lucky to have the most benevolent school owner.
People’s livelihood was shut down for a long time but this does not mean you won’t continue paying the bills. The bills will keep coming, in fact, in droves.
How will you then pay them if you relied on one income and have lost that source of income because of the pandemic?
This is a great lesson. When you have a stable job or a profitable business, save up money and start developing other sources of income for yourself.
Have Different Investment Portfolios
The classic warning on every investment textbook: “Never put all your eggs in one basket.”
It is a well-known fact that in every economic downturn, some industry suffers more than the other. A lot of businesses go bust while some grow.
If for instance all your portfolio is invested in the airline industry, you will bear the full brunt of this economic recession.
But if for instance you are exposed to the airline shares, but you still have stocks in the food industry, cement industry (which is doing very well in Nigeria at the moment) banking industry etc.
You won’t be spared from the impact of the recession of course because the general indices is going down. But at least you won’t lose say 50% or 100% of your investments.
Have Health Insurance
I know we don’t believe in insurance in Nigeria. Selling insurance in Nigeria is as difficult as climbing Zuma rock. Nobody wants to buy.
The Covid-19 pandemic is reminding us of the need to take good care of our health.
What other best way are we to protect our health if not to cover it with insurance?
What other money lessons have you learned from the Covid-19 pandemic?