Financial Management

Hi, I hope you are well, today I come bearing my dad's blog post that he wrote which is very interesting and helpful considering he works in a bank. Make sure you read till the end. 

 Personal Financial Management:

Its daddy’s turn to grace the famous blog spot.

Thank you so much Gweth  for giving me a chance to be famous. I hope I will also be trending as you have been lately!

Let me start with the bigger picture to aid in positioning my topic…

Ever wondered what goes into a country’s budget or what makes the budget day (June 14th) look like a whole school open day… 

Just like a country’s budget and economy, your personal financial management should be a key aspect of your well being.  If not well managed, one can lead a life full of stress and no meaning.

The following tips will help you attain financial independence and freedom as you grow older.

Tip 1: Set financial goals

Every journey begins with a single step, the journey to financial success included.

Just like each journey leads to destiny, our financial journey leads us to an end goal.

A goal is an ambition or a vision if you like. 

As a tradition, most of us set goals every January as a New Year’s Resolutions (less screen time, more books, reduce on sweets, sodas etc), not sure how many of us have achieved even 20% of our resolutions.

Setting financial goals is no different, only now more measurable because numbers never lie.

Financials goals are best set in the form of budgets.

A budget is a simple spreadsheet or table that you can prepare on your computer/laptop/notebook itemizing all your projected cash inflows, cash outflows resulting in cash surplus or deficit.

Prepare this for the next 12 months with months populated horizontally then projected inflows and outflows vertically.

You should always ensure that the difference between cash inflows and cash outflows is a surplus and not a deficit lest you be in the same position as our beloved country Kenya.

It is desirable to have cash inflows that are consistent and sustainable. These could be fixed allowances from your parents, passive income from savings and any other venture that can earn you money the legal way.

The mantra here is to never live beyond your means.

Tip 2: Open a savings account with a teen/tween-friendly bank

A bank account is the most preferred mode of saving.

In this digital age, opening a bank account has become easier than opening an IG account.

You could have your parent or guardian open an account on your behalf.

(Get one from Stanbic Bank Kenya by downloading Stanbic Bank Kenya Mobile App from Google Playstore or Apple App Store then Select ‘open an account’.)

Ensure to bank all the money you receive and make almost all your payments digitally if you can.

Most mobile banking apps will allow you to view your statement anytime for free which makes it very easy to track your expenses.

Tip 3: Periodic review of actual vs budget

On a monthly basis have a sit down with yourself and see how you track against your budget.

Are you still on surplus or deficit?

If there are any variances between your budget and the actual bank statement, you need to establish the root cause.

Fix it if it leads to spending more or continue if it leads to spending less or earning more.

Tip 4: Start working on a longer-term financial goal

If you manage to achieve your set financial goals consistently for say 6 consecutive months, set your eyes on a bigger goal.

This can be done by keeping money away for investment or a long-term goal like a big purchase for something you have always wanted to have.

Step 5: Invest surplus in other assets:

A bank account is also an asset in business terms, but a wise investor never puts all eggs in one basket.

Depending on your risk tolerance you may decide which type of asset you want to invest in with your surplus cash.

Most Kenyans like putting money in Land (Land Banking), Treasury Bills, Treasury Bonds, Equity Stocks, SACCOs and the ones with higher risk tolerance will put it in business.

To diversify, you could do more research on the options above and see which one best fits your risk tolerance.

The key thing to note here is that the higher your expected return/profit the higher the risk you need to take.

Tip 5: Reward yourself

If your goals are met and on target, it will not hurt to spend a little money to spoil yourself

It could be getting yourself a coveted gift or just about anything that tickles your fancy.

Remember all work and no play makes Tom a dull boy.

Taking time out occasionally in a responsible manner is no harm.

But remember not to get into debt while at it! This too must be budgeted for!

That’s it for today, I hope this will be of help towards achieving your financial goals. 

I hope you enjoyed today's blog post from my dad and I also hope it was helpful to you guys.  About the website, very sorry it's taking long but something important came up. I promise it's coming very soon. 👋

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