Growing up, we used to refer to one of our uncles as an “economist”. He was nicknamed that simply because he was the uncle who would not give you a single cent unless you earned it. Earning Kshs. 5 from him just to buy a lollipop meant you had to do some chores like polish his shoes and we hated that as kids. Today, as a grown-up, I understand the value that he tried to instill in us. He was not just an economic man but a parent who wanted the young generation around him to learn the power of financial freedom and managing one’s earnings right.
We all have that one friend who earns more than we do but is always claiming to be broke. Sometimes, you may think that they use that to keep you from asking them for a loan. Although, in reality, that friend of yours is broke and it is as a result of not managing their finances well. Having a well-paying job is one thing, but making your income work for you is a different thing.
Here are tips to help you master the art of managing your finances, no matter your net worth:
- Analyze Your Expenses
We can easily describe your money habits by taking a slight look at your expenses. The first step to healing from bad financial management is by being genuine with yourself and listing down every expense, no matter how minor it may seem to you. The second step is categorizing them into housing, transportation, food, medical, savings, utilities, etc. This activity is an eye-opener to which of your expenses take up most of your money. As well as, which one is not a necessity or what should you spend most of your money on.
- Budget and Track.
Budgeting lies at the core of your money matters. To achieve a successful financial plan, you need to create a budget for all your expenses to eliminate excessive spending on unnecessary things.
You can use a spreadsheet to allocate a budget for each expense. Thanks to advanced technology, you can now do that using budgeting apps and monitor your spending as often as you can. Tracking your expenses will help reveal your spending issues, develop better spending habits and h learn how to save more.
- Savings
If something unexpected happens today and you are required to pay up some cash to sort out the emergency, what would you do? The answer to that question will determine if you have a stable financial plan or still struggling to make your money work for you.
Saving not only helps you in case of a financial emergency but also protects you from debt and financial stress. If you are disciplined enough, you can even try personal savings on your M-pesa. However, if you feel like you might be tempted to withdraw the cash sooner than expected, we have several SACCOs that you can register with. Alternatively, banks allow their members to have fixed savings that can enable them to earn significant interest, withdraw use the money after some time, and use it for better investments.
If you would like more of these, kindly let us know in the comment section or suggest a topic of interest and we will share more tips with you.