This article is a continuation of last week; Last week I shared three financial tips that will help you to be financially stable; Never co-sign a loan, make savings a habit and review your bank account transactions often. This week, I’m going to share five more personal finance tips that will change your life:
Spend within your means – It is known that most of us spend more than our income which leads to debt and stressful life. We need to start learning how to live within our means; Most of us are not used to living within our means. We can learn how to spend within our means; This does not mean buying less and cheap stuff, but rather planning our spending wisely. Learn to spend within your income and you will avoid a lot of money problems.
Don’t borrow money you can’t afford – In an ideal world, everyone would have enough money for their needs, but this is not the case, so some of us will need to borrow money to meet our needs. But unhealthy borrowing can cause you serious problems that can affect your finances and therefore your life. Do not borrow excessively and if you borrow, make sure that it is within your limit and can repay it easily.
Don’t lend money you can’t afford to lose – Here is the rule on lending money to people; If you can’t afford to lose it, don’t lend it. For example, if someone wants to borrow some money from you and you want to use the money in the near future, don’t lend it. My advice when you decide to lend to someone is not to expect to get your money back; This will save you the headache of chasing someone to pay you back and prepare you for the worse financially.
Have an emergency fund – We never know what can happen to us and life happens (ie, loss of a job, car breakdown, etc.) to us when we should be prepared. The emergency fund is very important because it can keep you afloat in a time of need without having to rely on expensive short-term loans. So how much should you save for your emergency fund? A good rule of thumb is to have an emergency fund that will cover six (6) months of your living expenses. It’s never too late to start building your emergency fund, so start saving now!
Seek a financial advisor – Even when you hardly have any assets or enough money, it is always good to seek advice on your finances. A financial advisor will help you identify your financial goals and guide you in the right direction on how to get there. Don’t wait until you have a crisis to seek financial advice, do it now.
To conclude, I want to reiterate that you do not have to be rich to be in control of your finances. In today’s world, financial literacy is needed more than ever; Whether you are poor or rich, managing your finances is imperative to having a financially stable life. I know in the beginning it can be difficult to plan and live your life according to your financial goals, but slowly you will be able to ensure that every life choice you make, brings you closer to your financial goals. If you are still reading this, I want to assume that you have decided to take your financial life more seriously, so start now!
Kelvin Mkwawa, MBA is a seasoned banker. He can be contacted via email address: [email protected]