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JEDDAH / RIYADH: As Saudi Arabia faces the coronavirus disease pandemic (COVID-19), concern about the economy increases.
Although many have hunkered down and organized some aspects of their lives, it is still difficult to predict how things will unfold. Therefore, people must prepare for the unexpected to ensure that they are in the best possible financial position to weather the storm.
As part of measures to address the impact of the COVID-19 crisis in the Kingdom, Finance Minister Mohammed Al-Jadaan announced that “the cost of living subsidy will be suspended from June 1 and VAT will increase from 15% to 15%. from July 1 “.
Is Saudi society prepared for this? And what steps should people take to adapt to the new standard?
“As a society, we have a weak understanding of the concept of long-term planning and we are hasty decision makers who base these decisions on current situations and circumstances,” said Dr. Ibrahim Al-Zibin, professor of sociology at Imam. Mohammed bin Saud Islamic University in Riyadh.
He added that people constantly face financial challenges, but to ensure financial stability they must change their attitudes towards spending, which
requires the development of good financial habits.
“Nothing is eternal; situations change and can be positive or negative, ”he said. “Circumstances force that change and, in all cases, we have to be prepared for the worst.
The household quarantine period is an incentive for families to adopt a policy of reducing expenses and focusing on saving.
Dr. Majed Abdullah Al-Hedayan, Financial analyst
“If you are an employee with a stable income but are financially unstable, this is the result of your own actions and is not caused by decisions made by the relevant authorities. These are necessary regulatory decisions that must be accepted and it is up to the individual to deal with the reality of the situation. “
Al-Zibin said that the Saudis tend not to be fully prepared, nor do they understand the magnitude of a situation until they are affected by a crisis.
“There is a gap between perception and reality, and this is the reality of the situation, whether we like it or not,” he added. “It is up to us, as a society, to be more responsible, more rational and less emotional.
“To have a clear understanding of the situation, we must be honest with ourselves. We must strategize, prioritize and financially manage our lives with the understanding that a paycheck is not fixed. We have to live within our means to eliminate and avoid debt, control impulsive spending and make savings instinctive by organizing an emergency fund. “
Credit cards, loans, savings, and even emergency funds allow people to buy more things than their income would not normally allow.
HIGHLIGHTS
• All necessary adjustments must be made as a family and not just for the individual.
• Children must also be aware of these decisions.
• Families must be transparent about their expenses.
Al-Zibin recommends that financial decisions be made as a family and not for each individual within it. She emphasized that children must be involved in the process because it is important that they understand their parents’ spending limitations and develop good habits for a better future.
He also urged families to be transparent about expenses, evaluate expenses, and live frugally. The pandemic, the subsequent blockade and now the increase in VAT and the suspension of the cost of living subsidy have led to panic buying, a type of behavior that Al-Zibin said is understandable but useless.
“Panic buying is one of the wrong methods of spending,” he said. “It feeds on emotions instead of rational thinking and, as a society, we sometimes react to situations irrationally.
“We are currently facing a crisis, but it is not one (that) should cause panic and fear. With all the decisions made so far, it is wise to remain calm. We will surely see an increase in panic spending in the next two to three weeks. as a way to prepare for the worst, thinking that this will be the easy way out. “
Dr. Majed Abdullah Al-Hedayan, senior legal consultant and financial analyst in Riyadh, agreed that, in light of the economic decisions already announced by the Saudi government, “and perhaps some more stringent measures to come,” the Individuals and families should review their finances and change priorities to limit spending and focus on savings.
We have to live within our means to eliminate and avoid debt, control impulsive spending, make savings instinctive by organizing an emergency fund.
Dr. Ibrahim Al-ZibinSociologist
“This will allow families to cope with the requirements of daily life, based on getting only what they need and not what they want,” said Al-Hedayan, who stressed the importance of preparing a budget based on available finances.
“The household quarantine period is an incentive for families to adopt a cost-cutting policy and focus on savings, based on fundamental needs rather than luxuries.”
