By CPA Ronald Edward Mukasa
As the country battles unprecedented hikes in prices of essential goods, households are at the frontline of dealing with the harshest realities of the price changes. The family may consider some of these ideas below as they deal with the challenging financial times;
Candid family financial discussions
The family (especially spouses) should have an open and candid money discussion on how the family is going to navigate the current challenging financial waters. Most changes the family needs to make shall be tough and will require consensus. This discussion may be uncomfortable (especially if it hasn’t been happening) but it is necessary for the financial health of the household.
Identify leakages, avoid wastage and stretch your pay-check
Frugality is a natural response during challenging times. Family resources should be directed to basic needs like food and key family overheads like school fees. Having family buy-in is critical to identifying the leakages and taking the difficult decisions to plug them. Amidst changing prices, it is prudent to assume that a paycheck that could take you through one month can now only do two to three weeks, so you are going to have to stretch it.
Engage your Lenders and Avoid More Debt
Families with debt may struggle to repay amidst the increasing costs of living. In case you anticipate this to happen, don’t consider hiding from your bank manager or lenders. Approach them and share with them your economic realities and look for a solution together. This may include rescheduling the loan or giving you an opportunity to liquidate your property on your own terms without excessive penalties. At the same time, avoid the temptation of taking on more debt to cover the gap created by the increasing prices. This may prove difficult to execute but it is critical to avoid falling deeper into the debt trap.
Go slow on capital intensive projects
If your household has a capital intensive project like building a home that it is undertaking, it may prove helpful to slow down on the project to release cash-flows to cover the rising household bill. The desire to continue the project may push the household further into debt which may worsen the household’s family health. It is sometimes okay to pause a project for a few months to allow the family to stabilize.
Get your household economically active
There is a limit to how far you can minimise the costs, therefore, the family should look to boost the income. If one of the spouses is out of work, this is a good time to consider how they can become more economically active which may include looking for part-time work or starting a business.
During this period, you shall quickly notice that many in your community are doing economically worse than you. This is a period to share and not to hoard. Go out of your way to share with your community and ensure that those less fortunate than you can be able to make it through this period. Such challenging times present an opportunity to bond as a community and generosity is the glue that can create and sustain this community bond.
CPA Ronald Edward Mukasa is the Director Research, Innovation and Learning – Enterprise Uganda
The post OPINION: Rising Commodity Prices; Tips for Households first appeared on ChimpReports.