CIC Blog

FINANCIAL WELLNESS DURING AND POST COVID 19

According to an article by Alex Kessler published in February 2020 in the Centre for financial inclusion magazine, finances are the most common stress factors amongst Kenyans and managing that stress through financial wellness can have real benefits to a person’s health. Financial wellness is the ability to have a healthy financial life. It means your debts are payable and one has ample day to day, emergency and retirement funds.

According to the Kenya Bureau of Statistics survey on Social Economic impact of COVID 19 on households’ report 2020, more than 1.7million Kenyans lost their jobs in the first three months of the pandemic while 30.5 per cent of households were unable to pay rent on the agreed date with the Landlord. Approximately 59.8 per cent of those who usually pay rent on agreed date were able to pay on time for the month of April.

Due to the negative effects the pandemic has had on the economy, livelihoods have been affected in one way or another and as such, people have had to adjust financially to the new environment. According to a report by Scanad marketing agency released in July 2020, the economic strain caused by Covid-19, has seen approximately 435,000 Kenyans being laid off from their jobs while 54% of Kenyans have received a salary cut. As a result, shrinking wallets have sparked a drastic shift in spend, purchase habits and routines as most consumers try to cope with the harsh economic effects.

However, the Government of Kenya has helped employed and self-employed citizens ease their financial burden with relief measures such as the reduction of Pay As You Earn by five percent and Value Added Tax by two per cent. With the pandemic, children have not been able to attend school, hence many parents have not paid school fees as per the usual. This has seen Kenyans finding themselves with a surplus which they can now save.

A sound financial plan is important as it helps reduce and possibly eliminate financial distress that may arise from various responsibilities and unexpected situations. Part of the plan is identifying the type of investments whether short term or long term, one is willing to make in order to achieve their financial goals especially during this period.

There are various long term and short term investment products that are budget friendly in the financial sector. Despite the prevailing pandemic, unit trusts continue to record growth as they are amongst the most popular investment option in the Kenyan market. Depending on the type of unit trust and ones’ risk appetite, they offer favorable returns and minimum investment amount of Sh5,000. Some trusts allow one to withdraw funds in case of any emergency.

Nobody is ever prepared for unforeseen circumstances, that’s why products like Education covers are the best investments to ensure that no matter what happens, your child’s education is guaranteed. With as low as Sh3000, you can get a CIC education cover that will ensure you never have to worry about your children missing school due to lack of school fees.

The Covid 19 pandemic should serve as a red flag for most us on why we should save and plan in advance for our retirement. Even with the ongoing financial difficulties, one can revise down their contributions if they no longer have an income during this period.

Whether the investment is long term or short term, it’s important to safeguard your finances. This will help one prepare for unexpected events and be financially secure post Covid-19.