According to the World Economic Situation and Prospects (WESP) 2021, the Caribbean is set to face a fragile and uneven recovery as the COVID-19 pandemic may leave lasting scars on the economy of the Caribbean. With the Caribbeans GDP declining by 8% in 2020, people in the Caribbean have been forced to cut costs.
The Caribbean’s GDP
The report by WESP has warned governments that the negative effects of the COVID-19 pandemic may be felt for years to come. This can be prevented with smart investments in economic, societal and climate resilience in order to ensure a robust and sustainable recovery of the economy. The Caribbeans GDP has declined by 8% in 2020 due to prolonged national lockdowns, weaker merchandise exports and a collapse in tourism.
The Caribbean’s tourism-dependent economies have been severely affected. This has led to these economies suffering double-digit contractions of GDP. The UN has been able to provide a baseline scenario which has projected a growth of 3.8% in 2021, and a further growth of 2.6% in 2022. The pandemic, and drop in GDP, has resulted in millions of jobs being lost. A large majority of these jobs originate from the informal sector. Retail and hospitality sectors are known to hire women, younger people and workers with low education. These sectors were hit the hardest, resulting in not only job losses, but also income loss. Due to this, people in the Caribbean have had to find ways to stretch their money and save on expenses.
Here are five ways to save on expenses in these unsure times:
1. Determine a budget
People should create a rough idea of what their spending is for the week and month – a lot of research is available on budgeting. This will lead them to forming a plan on how to cut costs. People should consider their income and expenses, and then categorize the needs from the wants. Luxury or unnecessary items should be highlighted. Examples of this would be subscriptions to streaming platforms or the purchasing of cosmetic products. People should consider how much they use these luxury items and aim to eliminate as many luxury items as possible. This will lead to significant savings.
Although cooking has become a hobby for many during lockdown, it is also a way to cut costs. Buying processed food, takeaways or easy-prep food is known to cost more than fresh ingredients. This is because customers have to pay for the ingredients and cooking processes in these mentioned food options. To cut costs, people should buy the raw ingredients and cook their own food.
3. Save before spending
Many people have the habit of saving after they have spent their salary on goods, services and bills. To save more successfully, people should consider their salary and their disposable funds, and then dedicate an amount to their savings. There are ways to save besides the conventional savings fund, such as investing in stocks or cryptocurrency. This may prove to be wildly fruitful, but it is also a risk.
4. Avoid panic buying
Panic buying, which may seem like the correct choice at that moment, leads to the unnecessary loss of valuable cash on hand. Panic buying has proven to cause buyers to purchase unnecessarily large amounts of items, or items that they won’t or cannot use. When it comes to panic buying food items, many of these items end up spoiling. Ultimately, panic buying results in people losing money unnecessarily and wasting resources. In times of stress, people should determine what is needed and should look for the best prices.
The bottom line
Saving on expenses during a pandemic, which has resulted in economic uncertainty and struggle, has been proven to be a double-edged sword. Saving is simple if the person knows how to do so, but consistent saving requires determination and control. Additionally, not all people in the Caribbean will be able to follow all five ways of saving due to financial constraints. In this case, people should implement ways of saving which are possible and suited to their situation. Every cent counts.