Monthly Archives: December 2020

Popular comedian Ian ‘Ity’ Ellis is reminding young people about the importance of saving.

Drawing on part of a quotation from Earl Jarrett, Chief Executive Officer of The Jamaica National Group, Mr Ellis pointed out that “savings are not only the fuel for investments”, but that the money, which is put aside when times are good, is often what individuals and their families turn to in challenging financial times.

He was addressing the, ‘Ask Me Anything About Money’ Youth Forum, organised by the JN Foundation through its BeWi$e Financial Empowerment Programme.

The live chat was held at the Terra Nova All Suite Hotel in Kingston on Wednesday, November 25 and streamed LIVE via Facebook, Instagram and YouTube.

“This season has really taught me the value of having some money set aside. I tell my daughter that the one thing I would change if I had the power to go back in time, is that I would save more,” said the accountant and entrepreneur.

“I am blessed to be in a position where if it were not for savings, my children would discover what it is to be hungry. Therefore, I would really like to emphasise to young people that they need to develop the habit of saving, especially when they come into some earnings.”

Mr Ellis, who was a special guest at the event, stated that the global pandemic has highlighted the importance of savings in the lives of many Jamaicans. He noted that many persons are now struggling to make ends meet, due to the severe socio-economic effects of COVID-19.

“I know it is said many times on platforms such as these. However, the truth is that the message is very relevant, especially now, as so many persons are struggling, because they didn’t save at all,” he said.

Onyka Barrett Scott, general manager of the JN Foundation, agreed with Mr Ellis, advising that the rule of thumb when it comes to saving is to, “pay yourself first.”

“When you receive your pay cheque each month, no matter how small it is, try to set aside at least ten per cent of your earnings,” she recommended. “Put that ten per cent in an emergency fund and don’t touch it at all, because there is going to come a day when you will really need it.”

Mrs Barrett Scott noted that this rule applies regardless of the individual’s income.

“Many young people will say that they don’t make that much; therefore, how are they going to save ten per cent each month? But, regardless of the amount you make in salary, you can still put aside something. Start with whatever you can and gradually move towards the ten per cent over time,” she emphasised.

The “Ask Me Anything About Money” forum was geared towards young people between the ages of 16 and 30-years-old, who were interested in financial education. It addressed issues such as saving, budgeting, investments, insurance, credit cards and pivoting during the COVID-19 crisis.

Rose Miller, head of the JN BeWi$e Financial Empowerment Programme, says contrary to the common belief, a credit card is not a “debt sentence,” if used prudently.

Mrs Miller, who is also Grants Manager at the JN Foundation, stated that a credit card can be an important tool in the quest towards financial security, if managed carefully.

She added that one of the values of a credit card is that, it gives people access to money they would not otherwise have.

“When you have a credit card you have access to the money that is on the card. Therefore, if you’re on the road and you’re in an accident or you need to rush to the hospital, you have that card and you can use it. And if you pay your credit card bill on time and in full, each month, you pay absolutely no interest on that money,” she pointed out.

Mrs Miller informed that persons can also use their cards to spread out payment for major purchases and establish healthy credit. Some credit cards even come with rewards, such as discounts or cash back on purchases, or airline miles.

She noted that during the Christmas season persons may be tempted to spend more than they normally would; and in many cases, the ease and convenience of the credit card may encourage overspending.

“I encourage prudent spending and careful budgeting at all times, but especially around this time of the year, because credit card debt can be overwhelming; and may prevent persons from saving for future financial goals,” she explained.

Mrs Miller pointed out that there are measures persons can take to prevent credit card debt. Whether they are opening their first credit card account, or starting fresh after paying off a large balance, here are some tips to use credit more wisely and avoid debt:

Spend Within Your Means

The best way to avoid credit card debt is to pay your balance in full each month. But how can you ensure that is an attainable goal? The answer lies in your spending habits. It is important to understand that your credit card can be a tool to build credit; and pay for larger purchases in small increments. Hence it should not be a way to buy things you cannot afford. This can be a hard lesson to learn, as it is easy for credit cards to feel like “free money.” But remembering to only put purchases on your card which you will be able to pay off, is the simplest way to prevent credit card debt.

Make Monthly Payments on Time

Another way to prevent credit card debt is to make payments on time, every time. Many banks let you set up automatic payments, so money from your chequing account can go directly to your card before it’s due every month. You can also set up personal reminders on your calendar if this isn’t an option. Late payments often result in late fees, which can quickly add to your existing balance and make it harder to keep up with payments. You may also consider making multiple payments a month if it works with your budget.

Keep A Low Utilisation Ratio

Ideally, you want to pay your balance in full each month, but if that is not possible, at least try to keep a low utilisation ratio. Your utilisation ratio is the per cent of credit currently in use. Let’s say you have a credit line of $100,000. If you have $50,000 in purchases on your card at a given time, you have a 50 per cent utilisation ratio. Using a high percentage of your available credit can make it harder and harder to pay off debt. As you accumulate a higher balance, you’ll end up paying more in interest. As a rule, keep your utilisation ratio below 30 per cent of your available credit to stay on track and prevent accumulating too much debt.  The credit utilisation ratio is the second most important credit score factor after payment history.

Understand Your Credit Card Terms

Knowing the specifics of your credit card agreement can help you to avoid unexpected fees and keep track of your payments. Different credit cards will have different interest rates and potential fees. Before you use your card, read through the agreement to understand when you will be charged a fee, how interest will be applied to your account, what is the current interest rate and when that interest rate will increase. For example, some cards offer zero per cent interest for a specific amount of time; however, when that time frame is up, you will be charged interest on your purchases. Don’t let these factors surprise you. A good way to ensure you stay in the know is to continually improve your financial education.

It is Not Too Late to Save For a Debt-Free Christmas!

As the country grapples with the onslaught of a global pandemic and its economic effects, the idea of merriment and festivity this Christmas season may be a distant thought from the minds of some Jamaicans.

However, despite how tumultuous 2020 has been and the lingering uncertainty which lies ahead, Rose Miller, grants manager at the JN Foundation, said that the holiday tradition is still on this year’s calendar, “whether we like it or not.”

“And the season still comes with its numerous financial responsibilities. Therefore, you still need to have a viable financial plan, to ensure that you keep your holiday expenses under control; and so that you do not start 2021 in debt,” she advised.

Mrs Miller, who is also head of the JN BeWi$e Financial Empowerment Programme, pointed out that it will be a difficult Christmas for many, particularly those who have lost their relatives, jobs or businesses, due to the COVID-19 pandemic. She noted that the recent heavy rains that have lashed the island, causing severe flooding in some communities, have further dampened the spirit of many Jamaicans, and has also placed them under increased financial stress.

“This means that careful and meticulous budgeting for the season is extremely important,” Mrs Miller informed.

The JN Foundation’s financial literacy expert, suggested that the first, and probably the most important step, is to set a Christmas budget. “If you have not already started saving for Christmas, you do not have a lot of time, but it is not too late. You still have about six weeks to go, and it is never late to get serious about budgeting your money,” Mrs Miller pointed out.

Set a Budget

She advised persons to sit down with pen and paper or use one of the many budgeting apps that are available on the Internet to help create their own budget and see how much they can set aside in time for Christmas Day.

“To begin your budget, make a list of family and friends you will be buying presents for and allocate an amount for each person. If you are hosting dinner, then consider how many people will be coming over and how much you will need to spend on food and drink,” Mrs Miller said.

She said persons should remember that there is a limit on the number of people who can gather in one place this Christmas season, due to COVID-19 restrictions. “This may very well be a plus for your pocket, as you won’t need to spend as much as you normally would,” Mrs Miller noted.

Work Out How Much to Save Weekly

“From there, you should be able to work out how much money you would need to put away from now until Christmas. For example, if you are planning to spend $40,000 on dinner and presents, you would need to save at least $8,000 a week for the next five weeks,” she said.

The JN manager advised that people should treat saving in the same way as they would a bill.

“Committing to saving a regular sum each month or week is more effective and would be more successful than simply saying you’ll save whatever you have left over after spending, which may be nothing,” she pointed out.

Try to be realistic, bearing in mind all that has taken place in 2020 and the continued uncertainty of the immediate future. It is better to commit to a manageable sum than to aim too high and give up, Mrs Miller pointed out.

Be Creative with Your Gift Ideas

To further cut down on how much you spend, you need to be creative with your gift ideas, Mrs Miller recommended. “Gifting does not have to be a spending spree,” she said.

She suggested that instead of rushing to purchase gifts, people should consider creating their own gifts using their skills. Purchasing or creating gifts that can be shared by more than one member of the household, instead of providing individual gifts, is another idea to consider.

“It saves time and money, as you don’t need to shop for every single person. And, very often, the gifts you create are not only less expensive, but they are more meaningful than the items you buy in a store,” she said.

Start Your Shopping Now!

Mrs Miller said start early. “Picking up Christmas essentials, such as gifts and decorations, when they are on sale can earn big savings.”

Take advantage of online deals and events, such as Cyber Monday and Black Friday.

“If you know what gifts you need to purchase, it can help you to pick up some items over a period, to help spread the cost; and save you the hassle of shopping in peak periods,” she advised.

Mrs Miller pointed out that there are also many ‘free websites,’ which allows persons to create their own cards, with family photos and videos. “There are many ways to save a dollar or two, you simply to be creative; and, most of all, be determined not to overspend for the holidays,” she advised.

With such few opportunities to indulge in social activities during 2020, due to the restrictions and challenges posed by the COVID-19 pandemic, there’s a temptation among some Jamaicans this year to ‘live a little’ this Christmas and treat themselves and their loved ones.

However, Garfield Goulbourne, relationship manager at JN Bank, is advising persons to balance that need for interaction and treats with thrift, and avoid blowing their December salary on Christmas gifts and other holiday expenses, considering the continued economic uncertainties.

Mr Goulbourne is instead encouraging Jamaicans to save or invest their pay cheque, bonuses and any additional income they might receive this festive season, in order to better prepare for the New Year.

“With all that is happening across the globe, because of COVID-19, including job losses and pay cuts, this year is certainly not the time to make carefree spending choices, such as using an entire pay cheque on fun and festivities,” he said.

“I understand that it has been a rough year and many of us want to enjoy ourselves and unwind a little, but I must warn against going overboard. The sacrifices you make and the restraint you exercise will be worth it in the long run, and will set you up well for 2021, and years to come,” Mr Goulbourne added.

He further noted that many people will be getting paid early this month, as they prepare for the holidays, and as such, they should remember that the funds will have to stretch for much longer than usual.

Mr Goulbourne, who is an ambassador for the JN BeWi$e financial empowerment programme, managed by the JN Foundation, warned that January expenses need to be considered before money is spent over the holiday period.

He said early December payments should not be spent before creating a budget.

“Budgeting starts with knowing how much you have to spend without using credit cards and heading into the red. It’s as simple as that. Forward planning is one of the ways that you can reduce the financial burden of Christmas. Once you have your budget, stick to it and you shouldn’t have any debt going into the new year,” he said.

Mr Goulbourne advised that a few questions people should bear in mind before spending their December salary include:

• Have you set aside money for January expenses, including school fees?
• Is your car registration and insurance up to date?
• Am I up to date with my billers and creditors?
• Have I thought seriously about health insurance and other medical expenses in case I fall ill?
• Do I have enough funds in my account in case there is a major emergency?

He noted that these considerations must be prioritised over holiday shopping.

Mr Goulbourne also had some advice for the fortunate few who will receive Christmas bonuses from their employers, this year.

“This year is the year to make your Christmas bonus count. Save it or invest it if you can, but if you must spend it, do so wisely,” he said.

“A few of the ways you can make the most of your Christmas bonus is to use it to pay off debt, boost your emergency fund, or add it to your retirement savings,” Mr Goulbourne said.