FINANCIAL PLANNING
Importance Of Personal Financial Management Skills
By Rose Wakiria
Planning personal finances is an important skill to have , akin to time management , decision-making , and communication skills . These skills enable one to make the most of their resources to meet their prioritized goals . While these skills may come easy for some people , a majority struggle and need to learn and practice them to influence their behavior . Yet , this skill has not been a part of our school curriculum .
That is why many of us struggle with managing our personal finances to varying degrees . For some , the financial resources always seem inadequate compared to their needs . Others have erratic incomes which make it difficult to plan for regular and irregular expenses . Yet , some have the resources but struggle with clarifying and prioritizing their goals . All these lead to confusion and lack of confidence in decision making . No wonder many are lured into ‘ get rich quick ’ scams that leave them worse off .
Why master money management skills ?
You will need to manage money throughout your life as you apply financial resources to meet your needs and wants . Needs increase and change across life stages . As you go through life , you will need to prepare for future transitions hence the need to master money management skill . You may choose to further your academic or professional education or passing of years . This will , however , not automatically result in managing your finances better , hence the need to learn and master it .
Life is a series of transitions ; life changes that in most cases require financial resources . Think ; getting married , starting a family , educating children , relocating , starting a business . All these require you to spend money . Only a handful of transitions such as getting a new job , promotion , liquidating an asset or business and inheritance put money into your pocket . Hence the need to plan your finances well to cover future predictable and unpredictable transitions .
Economic uncertainties and cycles of growth and decline affect our financial resources . There are seasons of plenty and seasons of want or shortages . We are certain of the cycles but we do not know when they will happen , what will trigger them , how long they will last and their potential financial impact . Prior to 2020 , our economy was already showing signs of decline . The pandemic only sped up the economic decline . Thousands of jobs lost and many businesses are struggling to remain afloat , affecting many households ’ incomes . Good financial management would enable individuals and households prudently manage the resources during times of plenty and be ready for the hard times when they come .
With all life ’ s uncertainties , manage your financial resources to take care of current and future transitions . Failure to plan well may leave you unprepared for future transitions . No surprise that many people find themselves ill-prepared for transitions such as retirement , despite having decades to prepare . With a plateful of responsibilities , retirement might not be a priority for many years . With passage of time , many realize that they took too long to prepare for it . Others find themselves with an assortment of assets that are not serving well .
To take care of one ’ s needs both now and in the future , you need to plan well , and you need personal financial planning skills . The sooner you master the skill , the more you will make the most of your financial resources and navigate through life ’ s transitions more smoothly . Without this skill , many people struggle throughout their working life and into retirement . Yet , not because of scarcity of resources but because of poor planning that result in lost opportunities .
Many have learnt to manage their finances through the schools of hard knocks . This takes time and it is very expensive . There is a better way . Learn and apply the principles of money management , understand financial and investment products available to help you plan for current and future financial needs . This will save you money , time and give you peace of mind .
Sometimes the challenge is in implementing what you already know . Working with a financial planner can help you simplify financial decisions , clarify and prioritize your goals , overcome obstacles and gain confidence in your decision making . They act as an accountability partner , helping you stay on track and achieve your goals .
That ’ s why , in 2020 , I took time to write the book Retirement Planning : A Holistic Guide to a Satisfying Season . This book addresses why you should start planning for this transition early in your working life . It is a practical guide on financial and investment products you can use to prepare financially for this transition . It emphasizes the need for holistic preparation to have a satisfying season . The book highlights many of the physical , social and psychological changes and losses you are likely to experience as you transition into retirement .
Invest in gaining and mastering personal financial management skills , get help if you need it and make the most of your finances .
Rose Wakiria is an Author and Founder , Consultant and Trainer , Nextmove Consulting Limited and Retirement Solutions Insurance Agency . She is passionate about Financial and Retirement Planning . You can engage her on : Rose . Wakiria @ gmail . com .
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