01/07/2020
Not sure where to start? One of the really nice things about growing up in a small island like Barbados is the extended family. Everyone has a “Gran” or a “Great Uncle” or “Aunties”, and the elderly are always a wealth of information.
In the old days, pre-1966, Barbados was a low-income economy dependent on sugar, and life was lived very differently by locals. Older relatives remember well that life was hard back then. Money was hard to come by, people lived with a lot less, they saved money for a rainy day and their pastimes were inexpensive.
Photo: Getty Images, The Economist. Cutting Canes near the East Coast of Barbados in the old days.
Well, the time may have come to seek out the advice of this older generation or just learn to live a bit more as they did. This could help us ride out this storm known as the Covid 19 pandemic. It may not be easy, but it is possible!
We Know it’s Overwhelming …. but let’s try not to Panic!
First, let’s recognise that being unemployed or working for a reduced salary can be stressful. Suddenly, many have been faced with a situation where the monthly bills exceed the monthly income being earned. However, with 40, 000+ unemployed in Barbados since the April lockdown, it’s safe to say, you are not alone, many are in the same boat.
“Yes, it can be overwhelming. Yes, the future is uncertain. No, don’t panic. Instead, let’s make a plan.”
Have you been Laid-Off?
Only spend on what you need. Cut out all other expenses if you haven’t already. In the last two decades, Bajans have grown used to more affluent lifestyles. Unfortunately, we didn’t prepare for this crisis. Sometimes we need to re-focus and be clear on what’s important. For example, although we are a fun-loving people, maybe if choosing between a Kadooment Band and an urgently needed new fridge, the latter should win out.
If you have been laid-off or taken a salary cut to think about the questions below:
- Do you qualify for unemployment, and are you collecting?
- Are you able to pay bills for essentials such as food and electricity?
- Have you stopped buying all items that aren’t necessary for survival?
- If you are in arrears with providers, have you called them to discuss a way forward?
- Have you considered the possibility of other employment if such is available?
- Do you have a mortgage? Many banks have offered moratoriums for several months.
- What about Land Tax? Ask about a payment plan.
Make a Budget
Never write down your monthly income and expenses? It doesn’t have to be fancy, even a simple budget can help you to see your financial picture more clearly. It will show you how you are really spending your money and how you may be able to save by cutting unnecessary spending.
As said in Forbes recently, “Budgeting can set you free!”. If you already have a budget, now may be the time to re-evaluate that existing budget.
There are many ways to create a budget. There’s the old-time tried and tested way: pen, paper and a calculator. Nowadays, there are budgeting apps if you are tech-savvy or you may like to create the budget in an electronic spreadsheet such as Excel.
Start gathering information. What is your monthly income? What are your expenses? Some expenses are the same every month, some vary every month, and you may need to work out the average monthly cost for those items. The income should be straightforward, but the expenses may take a while to get a handle on if you haven’t previously kept careful track of your spending.
Expenses
Start with your expenses that may be similar every month, see some examples on the checklist below:
- Rent
- Mortgage
- Utilities (electricity, water, TV, Tel, WIFI)
- Car loan
- Car insurance
- School fees
- Daycare
- Housekeeper
- Club or gym memberships
- Any other loans
- Retirement Savings Plan
Next, try to get a handle on the expenses that may vary from month to month and maybe work out an average over 6 or 12 months.
- Groceries
- Misc. maintenance/repair of home
- House insurance
- Medical expenses
- Fuel for vehicle
Beware of the Credit Card
What about your credit card payments? What do you use your credit card to purchase?
Do you have an outstanding amount on your credit card? Are you being charged interest due to nonpayment or late payment? Are they recurring fees on your credit card that could be discontinued? Be careful….it is so easy to rack up big bills on your credit card.
Save…. Save…. Save
Buy the essentials and stop spending on everything else for now. Cover your “needs” and take a break on the “wants” for now!
Shop around for services or needed items as deals are available in this pandemic period. Consider cheaper brands when shopping. Reduce expenses such as mobile data – turn it off and only use WIFI. Do you really have to eat out, why not eat in more often?
The expenses that aren’t essential can add up. The clothing and shoes that aren’t really needed but you decide to treat yourself, splurging on that fine dining dinner or spending the day at the spa. Maybe, this isn’t the time for indulgences!
Balance that Budget
The hope is that on completion of the budget, the income covers the expenses! If not, maybe you have to find a way to reduce the costs. Currently leasing a car, perhaps you downsize. What about a “side hustle”, maybe there is a part-time job available on weekends (if you are already working) that could tide you over. Look around your home, sometimes your junk may be another man’s treasure, maybe unused items can be sold. There are pages on Facebook to facilitate this as well as a handy second-hand store.
Photo: Caribbean Aerial Photography – Carlisle Bay and Bridgetown
Think of the cheaper alternatives. Maybe you could go for a walk on the boardwalk, pay a visit to Farley Hill Park, lime on any of the many beaches, visit friends and family at their home or catch a movie at the Drive-In. Try an active pastime like a snorkel in Carlisle Bay, exploring the north of the island or go hiking on the east coast, to name a few. There are so many options.
Air travel just got even more difficult! Luckily for us, we have some of the finest resorts in the world. Instead of the expensive trip to New York, London or Toronto, take some time to staycation and enjoy Barbados.
Photo: Sugar Bay Barbados Resort
Lesson Learned
Always have an emergency fund. When the current crisis is over, try to add a monthly contribution to your emergency fund. Maybe even open a separate bank account into which you can deposit funds for use when the next time disaster strikes.
The End Result
Try to see the positive takeaways from this odd year. We learned to live differently – maybe we were too wasteful before. Some of us became more self-sufficient by learning to cook better, growing our own vegetables or completing that long-planned DIY project.
Maybe it took a pandemic for many of us to pay more attention to the important topic that is our finances. Now that you have taken this step, why not continue to monitor the finances? Evaluate and tweak the budget every now and then.
Many are in a challenging financial situation. We will get through this. Chin up! As the old people say,
“Remember, this too shall pass!”
Bougainvillea in Barbados.
Kristina Evelyn 