What is your vision for the sunset years of your life ? How many years away is that ? If you change nothing , will you achieve it ? If not , what do you need to do to realize your vision ?
do so diligently . A good minimum to save is ten per cent of your gross income , and you can build up from there .
Besides saving for investment , build a fund with enough to sustain you for six months in case you lose your income and need to get back on your feet . You can open a unit trust account with as little as Kes 5,000 /= and keep adding to it as often as you want .
Accumulate money in your current account or an easy to access savings account for unexpected minor emergencies , such as contributing for friends and relatives ’ needs and emergencies and car , appliance and home repairs and maintenance .
Save up for holidays and capital purchases like furniture and renovations . Use interest bearing accounts to save so that your money is not idle , and take advantage of compound interest , where you earn interest on interest and grow your savings faster . Save longterm with a good Sacco and re-bank the dividends to compound your interest .
Invest
Money loses value over time , so saving alone is not enough . Wise investing multiplies your money to give you higher returns and enable you to invest even more , and grow your net worth . The main avenues of investment are money markets , such as shares , unit trusts , treasury bills , treasury bonds , and commercial paper , real estate , such as buying and selling land , developing properties for sale , starting a business , or investing in a business for a return . Learn about investment options and risks , and make calculated decisions , diversifying your investments to spread your risks , and learning and growing from the mistakes you make . Assess your investments ’ performance regularly and be decisive about what is adding value and what is not .
Track spending
Keeping good records is key to sound finances . File your statements and use a note book or spreadsheets and good apps to create expenses categories , such as giving , rent , car , food , clothes , entertainment , and diligently record all your spending . This will help you identify where your money is going so that you improve your spending .
Budget
Rather than spend money anyhow , create
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What is your vision for the sunset years of your life ? How many years away is that ? If you change nothing , will you achieve it ? If not , what do you need to do to realize your vision ?
and work with a monthly spending plan , to keep you disciplined in your use of money . At the end of the month compare your spending against your budget and identify improvement areas in both your budgeting and spending .
Protect
Be aware of your investment risks and minimize and manage them . Assess global and regional economic trends and their implication on your investments . Protect your investments by securing them physically . Also take appropriate life and health insurance cover for yourself and family , and insure your assets from fire , burglary and theft . Diarize your insurance policy expiry dates and renew your policies in time to avoid being caught off-guard .
Manage debt
Continuous debt will keep you from attaining financial freedom . Short term credit , such as credit cards , mobile loans , and shylocks , is easily accessible , very tempting - and very expensive . Before borrowing , analyse your reasons for borrowing , and the interest you will pay . What seems small in the short term , adds up over time . Avoid borrowing in the first place , unless it is for significant purchases like a house , car and some furniture , and you can comfortably meet the principle and interest payments . If you do borrow short term , pay back quickly to avoid paying high interests .
As you are now saving and working with a budget , stop taking salary advances and certainly don ’ t borrow for clothes , concerts , parties or holidays , which can be paid for with cash , or after saving for some time . To break out of the debt cycle , list all your debts and systematically pay them off , starting with the smallest . If you have many debts , consider consolidating them into one , settle all your other debts , and diligently pay off the one debt .
Learn
Educate yourself on money by reading books , such as the Rich Dad Poor Dad series , and attending personal finance courses . Also learn practically , by playing personal finance games like the free online Rich Dad Poor Dad Cashflow ® game , which gives you insights for getting out of the rat race and attaining financial freedom .
Go with others
Identify serious , committed , trustworthy likeminded people and meet regularly to share your progress and ideas , learn from , and celebrate and support one another . Where possible , collaborate and synergize your efforts to faster realize your respective goals .
Merely knowing the right money moves is not enough . It ’ s what you do with what you know that makes the difference . Create your life vision , and based on it , set financial goals for the next five years , and then for 2023 , and Quarter 3 to September . Based on your Quarter 3 goals , determine the actions to achieve them , and just start systematically working towards them .
As coach , author and speaker , Bradley Vinson , says , ‘ Money is a tool . Used properly , it makes something beautiful . Used wrong , it makes a mess .’ It does not matter where you start . You may currently earn a small salary or be deep in debt . Don ’ t mind that . Just start , persist , and press on . By consistently making the right money moves shared here , you will become financially free , and bring others with you .
Don ’ t wait . Too much time has passed . Just . Start . Today . Now .
Caroline Nyamwaya Mwazi is Director and Chief Change Catalyst of Huru Consult Limited , a Nairobi-based management and training consulting company . She can be reached via email on : CMwazi @ gmail . com or LinkedIn Caroline Nyamwaya Mwazi .