We wrap up this week with more money-related questions you should know the answers to in order to take charge of your personal finances.

What is digital money, and is it the same as cryptocurrency?

Digital money is money that exists only in electronic form and not tangibly, meaning there are no cheques, banknotes or minted coins that you can see and touch. Digital money is strictly accounted for and transferred via electronic codes in computers. In Jamaica, digital currency is expected to come on stream in the very near future, and will be issued and regulated solely by the central bank, which will make it legal tender. It will be swapped via technologies like smartphones, credit cards and other cryptocurrency exchanges. Cryptocurrency, on the other hand, while another form of virtual digital currency, uses encryption techniques to control the creation of monetary units to verify the transfer of funds. It is private and, importantly, unregulated and so exists under the control of the currency developer. Bitcoin, which you would also probably have heard about, is one such example of cryptocurrency.

How do I explain to an elderly loved one that going back to being unbanked is not a good idea?

This unfortunately is a sentiment that’s not relegated to the elderly. By and large, it’s not so much a desire for people to randomly hoard money beneath their mattress as it is a nostalgic desire for the return to a simpler life. Digitalisation is an inevitable offshoot of progress, and as we increasingly colonise the digital ecosystem there will be less need for brick-and-mortar establishments. Yes, life is hard, and your loved one not being able to transact business at the bank in the way they’re accustomed to can seem like another hardship. If they feel they’re not computer savvy, this only throws gas on the fire. But what are their options, realistically speaking? Yes, there are certain associated risks, like fraud and hacking, which, frankly, have always existed. But the pay-offs for the customer, like convenience and decreased bank costs, not to mention compound interest, make the new banking highly appealing. Encourage your loved one to see this, and where possible, arrange to get support for them to become more au fait with digital technologies. A well-informed senior, in my experience, is a force to be reckoned with.

How can I save on a tight budget?

I hear complaints all the time from customers who claim that they are frugal but still can’t seem to make ends meet, let alone save. The truth is, what people often think of as being frugal isn’t. Also, what is your idea of a tight budget? To begin with, you have to spend less than you earn, and if you’re burning money, you have to realistically assess what your needs really are, as against your wants, and radically cut your spending. There is no longer space for keeping up with the Joneses. If you run with friends who are big spenders, don’t compare yourself with them. Is liming on somebody’s yacht out at Maiden Cay for a long weekend a necessity? Sure, you’ll have a lifetime of beautiful memories of a windswept weekend, but will you have a home? Will you be able to retire when you want to? Be honest in your assessment of what your financial goals are and how you can best achieve them. On the other hand, if you sincerely can’t save because you are truly living within your means but there is literally nothing to save after your bills are paid, it’s time to consider investing in yourself to increase your earning ability. Do a side hustle that you can save from. Maybe that side hustle can be a stepping stone to finance a programme of study that will potentially see you making career moves that will put you into another income bracket. There are so many possibilities; all it takes is creative thinking to see them.

Are credit ratings a thing in Jamaica?

Do you have dreams of one day buying a home? A car? Taking out a loan? A credit card? Then, yes, credit ratings are very much a big thing! Today, your credit score determines what your financial future will look like. The lower your credit score, the more of a risk you will pose to these financial institutions. A credit report, which these institutions will obtain, will determine the kind of fiscal control you’ve been displaying, showing, among other things, whether you pay your credit bills on time, how you repay your student loans, and so on. You can preempt the anxiety of waiting to see if you’re approved by an institution by applying for a credit report, at no cost, from any of three Bank of Jamaica-approved bureaus — CRIF Information Bureau Jamaica, Credit Information Services, or Creditinfo Jamaica — and you will be able to glean the status of your payment history, debts accumulated, credit limits, bankruptcy, foreclosures, repossessions, if applicable, and so on. Even if you’re not applying for a grant or a loan, it’s still a good idea to apply for a report once-yearly.

What is net worth?

Your net worth is the total arrived at when you subtract your assets from your liabilities, which means it’s the difference between what you own and what you owe. And, no, this isn’t just a concern of the wealthy. If you own more than what you owe your net worth is positive. If you owe more than you own, it’s negative. Once you begin making money, it behoves you to occasionally do a net worth temperature check of your financial health so you’re better equipped to make sound decisions that will affect how quickly you achieve your short-, medium- and long-term financial goals.