Consumers and companies alike have had to deal with and navigate the liquidity crunch that is driven by the lockdown-induced economic contraction. The efforts to curb the spread of the novel coronavirus (COVID-19) in South Africa and internationally resulted in an economic contraction of 7% domestically in 2020.
Due to the efforts associated with the rollout of the vaccination programme in response to the virus, the SA economy is anticipated to rebound (mainly attributable to base effects) by 3% of GDP growth in 2021.
The financial position of ordinary South Africans who may have been a part of the estimated two million people who lost work in 2020, or a reduction in their wage or salary and/ or the closure of their business, are adversely affected by this reality.
Enhancing one’s earning potential, be it through earnings generated from being employed, running a business or other passive earnings from one’s investment portfolios, is an important enabler to achieving lifelong financial freedom – especially when the right mindset, culture, and portfolio composition are built.
As such, below are some tips on how ordinary South Africans can enhance their ability to attain financial freedom even in the midst of a global pandemic.
You are the asset
The journey to achieving any kind of financial freedom begins with acknowledging that you are the actual asset. In order for you to achieve your goals, you have to be in good health, you have to have a set of unique skills that enable you to achieve your goals, and you have to have a good network of people around you to make this possible. This mindset is crucial because the value creation process in any pursuit starts with the individual. Therefore, set clearly defined goals.
“In order for you to achieve your goals, you have to be in good health, you have to have a set of unique skills that enable you to achieve your goals…” – Ndumiso Hadebe
Acquire a new skill
As industries evolve and companies are beginning to adapt to a climate that is characterised by accelerated digital transformation due to the pandemic, it is increasingly important to invest in acquiring a new skill that is in need in this changing climate. Regardless of the industry that you might find yourself in, new skills are required in the market today. The acquisition of new skills ought to be viewed as a lifelong learning pursuit, as such, a long-term strategy to value creation and financial freedom.
Connect with like-minded people and/ or institutions
Evaluate your immediate and extended network and explore the opportunities that may exist in the creation of a service, business, or employment prospect that you can pursue that may give you a competitive advantage.
Collaboration is an effective tool to leverage when you have the right composition of people around you who can assist you achieve your financial goals. This includes accessing the right kind of information from people who are experts in the field with respect to financial products that may be well suited for your journey. Start with the end in mind and work backwards.
Take the long-term view
Meaningful wealth creation and management are achieved over a sustained period of time. This therefore means that discipline and deferred gratification, when it comes to certain items, are traits that have to be balanced well with the incentives that drive you to achieve your goals.
Individuals can be able to achieve financial freedom if there are clearly defined goals as these serve as intrinsic motivation. Human beings are driven by incentives that are closely aligned with their goals of self-determination. Therefore, it is important that any journey to attain financial freedom begins with the knowledge of self in this regard.
Finally, you do not know what you do not know. Begin this process with an investment in yourself. Be it knowledge or skills and a value-adding circle of people that can guide you and hold you accountable to your own goals.
Ndumiso Hadebe is a South African Development Economist with a focus on economic and financial inclusion.