The continuously fluctuating economy keeps us living in fear, wondering if the money we
earn will ever be enough thus financial responsibility is crucial. Making a lot of money will not be beneficial if you don’t manage it well and a good way to start is by establishing boundaries. As overwhelming as it may seem, following rules gets easier with time.
Here are 10 financial rules you need to live by:
Track your spending
It’s important to watch how you’re spending your money. Keep track of every coin coming in and out of your ‘pocket’. Note every cost including housing, bills, savings, and general
expenses. If possible, mark down the date; it would be helpful to have an estimate of how
much money you spend monthly. Don’t ignore little things, as useless as they might seem!
The point of this is so that you can start getting organized. One of the apps I use is Reach
Save!
Saving is one of the stepping stones towards financial responsibility. If you can save at least 10% of your monthly income (but preferably more) your progress will be a comforting
reward every time. The M-Shwari Lock savings Account is a great place to start especially if you’re starting with small amounts.
Create and follow a budget
Once you begin to track your spending you will have an easier time creating a budget. It is
important to avoid rough estimates in order to benefit in the long run. Having and following a budget helps you manage your money and control your spending.
Set long and short-term goals
Along with your personal life goals, it’s important to set financial goals as well. An example
of a long-term financial goal could be building a house; a short-term financial goal could be
taking a weekend trip. These goals can be achieved over time and can be accommodated into the budget. Having goals is a good way to monitor your progress and get motivated!
Live within your means
This slogan really should be meant for Nairobians, case in point this tweet by resident writer, Mariga Thoithi
The amount of money that you spend in a month should be less than what you bring in.
Creating a healthy boundary with your finances will help you know where you stand. You
should be able to plan well enough in order to live below your means with ease.
Reduce and eliminate debt
If you have any type of debt, one solution is to pay down your high-interest debts first. It is
important to keep up with your monthly payments- paying more than the minimum
requirement if you can. This will help you reduce the interest rate and pay off your debt faster. Once paid in full the cash flow can be used to increase your savings and put your mind at ease. In order for this to work you must avoid incurring new debts in the process.
Invest
Investments provide stability. Some can be a source of income, while others grow your
wealth over time. They can help you achieve your financial goals. They can improve your
financial status. Table banking, starting a business, exchange-traded funds (ETFs), mutual
funds, stocks, shares, and property are just a few of the ways that you can invest. The best
way to find the investment option that will work for you is through a lot of research! Take
notes, read, re-read, and ask questions.
Start an emergency fund
Aside from your monthly savings, it’s helpful to start an emergency account. In case of any
unexpected event (or actual emergency) you should have a separate financial source so that your savings are not affected. When things get tough, you shouldn’t have to incur debt or deplete your savings. If you have an emergency fund, it will help keep your finances on track.
Purchase items you can afford
From cars to homes to electronics, it is important to be patient and plan ahead to avoid trouble in future.
For example when it comes to buying a house, the financial journey doesn’t stop after finding the house of your dreams, the costs have only begun!
– Can you comfortably afford the full down payment?
– Have you budgeted for unforeseen repairs and monthly costs? Does the mortgage cost less than 30% of your income?
– Have you done your research? This is not a decision you should rush into. Sometimes, not
buying a home is the financially responsible thing to do. Take your time.
Plan for the inevitable
Planning for the future is for you, planning for the inevitable is for the loved ones you leave
behind. Once again, research thoroughly. Invest in life insurance. Find a good lawyer that you can consult. Have a clear will in place. Make sure your important paperwork (deeds,
accounts, insurance policies, etc.) is organized and safely in one place. Protect your loved
ones in case of the inevitable.
There are so many aspects to consider if you want to be financially responsible. Remember,
the peace of mind that comes with it far outweighs the ‘hassle’ that it takes to maintain it. Do your research and ask questions. By sticking to a few financial rules you can stay organized, grow your wealth, and achieve your financial goals!
