It is no news that Covid19 has affected our lives in ways we probably never imagined. We never thought we would be asked to stay home for weeks. Who would have imagined a month without football, and that being a hero and saving the life of another would only require that you sit at home?

Beyond the ability of government to respond to unusual emergencies, one area which has also been exposed is our personal finance habit.

While it is true for Nigeria that the lockdown has revealed that over 50% of the country’s populace live from hand to mouth, it has also uncovered the fact that even though many do not live from hand to mouth, the negative financial effect and hunger has roots in our bad personal finance decisions. These decisions have revealed in recent times to be incapable of seeing us through unpredictable times.

We have often heard about saving, investing and having an emergency fund. We have always been advised to have an emergency fund which covers between 3-6 months cost of running our household. However, we have only come to realize how important an emergency fund is in these times. Not only have we just come to realize the importance, we have also learnt through the current situation that a fixed deposit or any other form of fixed investment is a wrong place to keep our emergency fund.

A lady recently shared that her emergency fund is in an account where she has no ATM or any form of internet banking. Before the lockdown, we would have thought that was good, but with the closure of banks she has been unable to access the funds as she didn’t envisage that extension in the lockdown hence resulting to borrowing in the meantime.

There is also the question of whether rent should be a part of our emergency fund or not. Even though many personal finance experts say that our rent should not be paid from our emergency fund, and that a different provision should be made for rent, I personally never knew the risk of paying rent from emergency fund until recently. In Nigeria, where rent is paid annually, paying

your rent from your emergency fund is a huge risk. Take an example of someone whose rent falls due in April, Having to pay rent from an existing emergency fund would be quite risky considering recent shut down in economic activities which has resulted in the inability/ reduced ability to generate revenue in the face of looming extension of the shutdown.

Someone said, “this lockdown will expose us”. It has. However, it is not a reason to panic, rather it calls for evaluation of our personal finance decisions and putting necessary measures in place to avoid making the same mistake twice. We do not expect another pandemic when this is over. However, let us learn the lessons and make necessary adjustments.

Written by Folukemi Meghomo

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