Journey to Your Financial Freedom
e all want to be wealthy, we all dream of striking it big
Mand for those of us who migrated from the motherland, the promises of a better life and economic success
were one of the catalysts to deciding whether or not to leave
the comfort of your home and start a journey to prosperity.
Now that you are hopefully making more money than you
would have made back home, how can you ensure that you
create wealth and attain financial freedom?The only secret to
ensuring that you achieve financial freedom is by starting your
journey NOW. The first step is to know where you are before
you can figure out how you are going to get where you want to
be. This means that you would need to calculate your financial
net worth. Your current net worth is what you OWN (Assets)
minus what you OWE (Liabilities). Once you figure out your
net worth, you are now able to set up a plan to get to your
financial freedom.
This means that you need to SAVE, INVEST, INVEST and
INVEST. You work very hard for the money you make,
therefore it is only right to take care of yourself and pay
yourself first, so as to save for a rainy day. It is also crucial to
dedicate some savings to an ‘Emergency Fund.” As many
families have experienced in the last couple of years, a job is
no longer guaranteed. Things can change in a moment; therefore you need to be prepared by planning ahead of time and
putting money aside that you can tap into during hard times.
No longer can people depend on credit cards, the credit limit
can be reduced at any time and if you do not have the funds to
pay the bill at the end of the month, you will be paying interest
that can take you years to pay back in full.
The question I get asked a lot is how much to save and when is
the best time to start saving. The best time to start saving is
NOW. How much you put aside is based on your budget, but
It is important to have a cash flow management system in
best practice is to put aside 10% of your take home income for
place as this is an important component in the journey towards short term savings and an additional 10% for long term investfinancial freedom. Great management of your finances ensures ing. If this is too much for you right now, that’s ok-start small
that you are spending less than you make. Setting up a monthly but plan to work your way to attain the 20% figure. The best
budget is a great way to keep track of your finances to make
cushion of funds is 3 – 6 months of
sure you are on track. When you are figuring out your budget, monthly expenses, thus ensuring that
you should begin by approximating how much you make
you have ample time to go out and
monthly. Once you know this, you are to list down all your
find a job if you are laid off, or time
fixed expense i.e. Rent/Mortgage, Insurance (Auto, Home,
to implement a business idea if that is
Medical, Rental), Loans (Auto, Secured) and then your neces- the plan you have.
sary variable expense like groceries, utility bills, transportation
costs. Once you deduct these costs from your income, the rest
of the funds can be devoted to savings, investments and
Wambui Gaitha
Founder & C.E.O
discretionary spending.
Once you set up the cash flow management system, the next
step to make to attain financial freedom is to pay yourself first
IDEA DIAPORA 18
Regal Africa
www.regalafrica.co.ke
[email protected]