What are hard economic times

hard economic times

Great economies are facing hard economic times and are struggling, hence living in a country where majority live below the poverty line, things seem to be moving from bad to worse. The Banking industry is also affected by hard economic times.

If one reads the Bible, one will notice that these are not unique situation. There are stories of mothers eating their babies and people feasting on the refuse of the donkeys. People in ancient days also lived through hard economic times too.

One of the most mind boggling things about the human species is the ability to adopt and be very innovative during these times. Tough people have an inner strength and that is why they have the ability to last during tough times. It is not about physical strength but inward strength that they draw from.

 Some of the secrets for living in hard economic times

• They acknowledge the change due to living in hard economic times and that is not business as usual.
• Apart from acknowledging the times they are living in they set strategies on how to thrive while living in hard economic times. This is to ensure that at the end of these hard economic times, they will not be beaten to pulp. Put in simple words they do not just whine but take action.
•  one must avoid taking loans and learn debt management strategies

Highlights of financial strategies one would adopt while living in hard economic times

1. Stick to your budget especially on non essential expenses. Take for example your monthly budget for fuel for your car; when you realize you are spending beyond this budget then reduce the number of times you use the car and stick to the budget. For ladies maybe one should reduce the visits to the salon, one can opt to do basic hair maintenance like washing or even treating the hair at home.
2. Please do not dispose off your near cash investment to meet your daily living expenses. These are assets such as shares. After all, with the poor performance of the economy one is likely to sell them at a loss.
3. There is no use on spending on holidays one cannot afford. You can opt to take the family for a simple drive to the park and spend quality time together instead of taking an expensive trip to the coast yet they cannot afford the same so they have to borrow. Let prudence take the place of pride, put image issues aside everyone is feeling the pinch.
4. Make sure when going to the supermarket a shopping list should be in hand to avoid buying what one does not need.

In the middle and lower class bracket where the salary is not increasing as fast as the inflation rate, disciple is one of the key qualities adopted.  Let us keep hope alive as we see these hard economic times through.

It ensures that the investors and borrowers needs are met. Fundamentally the Treasury department plays a very important role in the continual functioning of a bank. Some of the important roles it plays are:

1. Liquidity position function by Treasury Department

Treasury Department

It ensures that the liquidity position of the bank is sound. One of the conditions of the Central Bank as a regulatory authority to Banks is that banks maintain a deposit account with it.

This account should at all times be maintained at a certain set minimum balance. Failure to ensure compliance to this and the bank faces the risk of high penalty levied on it. The bank could even be placed under statutory management if the problem persists.

The basic function of this account is to ensure that the banks are able to settle their interbank obligations, as and when they fall due. This usually means cheque payment and funds transfer.

So Treasury department in the bank ensures that the account has sufficient money to meet its obligations, even through overnight borrowing from other banks. This quick loan in most cases charges high interest rate.

2. Investment decision by Treasury Department

Treasury department facilitates the investment decisions for surplus cash in the bank. The investment should be one with a good return. Risk should be taken into consideration, as holding idle cash is very unwise.

3. Treasury Department foreign currency policies

The department determines the exchange rate for foreign currencies against the local currency. This is dependent on the market forces of demand and supply of currency.

The department ensures that there is adequate supply of the foreign currencies and that the foreign accounts are adequately maintained to ensure they meet their obligations

4. Treasury Department interest rate policies

Depending on the cost of funds acquired for lending, Treasury department determines the interest rate that is charged to their customers who are borrowers.

The department through market analysis of the interest rates paid to investors, for example, Securities offered by Central Bank, helps determine the interest rate to be paid. Interest rates are paid for time deposit accounts like the call deposit account and the fixed deposit account.

Treasury department critically evaluates the financial activities, the risks and ways of mitigating the risks.