It's that time of year where we file our taxes. ‘Getting my finances together’ is on everyone’s list, and I am not the exception.
I am also reviewing my progress in the financial goals I made in the last financial year and unfortunately, I didn't make much progress. 2020 got in the way of pretty much everything, so financial wellness has not been a top priority.
If you are in the same position, please know that it is absolutely understandable. If we learnt anything last year, it’s that plans change. Goals that seemed important may suddenly need to shift. But that doesn’t mean they go away. Instead, they’re a work in progress.
As we begin another financial year, I am writing this post to recommitt to my journey to financial wellness.
Kindly share some of your tips in the comment section too.
1. I will write down my goals.
Writing down your goals is the fist step towards financial commitment, and will enable you to analyze, prioritize and focus more logically on what you need to do yearly and monthly. From your goals, you will be able to further deduce your weekly and daily action plans.
It will help you move from building castles in the sky to making concrete growth in your net worth. It is the difference between the person that has an architectural drawing of their dream house and the one that has their dream house as a screen-saver.
2. I will reduce my spending.
As long as you are spending money, there lies an opportunity to reduce it. Whatever the level of spending, small cuts can collectively lead to huge savings over time. The place to start is in discretionary expenses- entertainment, eating out, e.t.c. These savings do not necessarily mean a drop in living standards but more efficient use of resources.
The goal of reducing spending is to free more money for you to invest, so you can meet your long-term needs.
3. I will use a budget.
A budget helps you be more deliberate about how much you spend and when. When it comes to money, you cannot control what you do not know so making a budget is the first step to having direct influence over how you want to spend your money.
4. I will not simply chase income, but grow wealth.
Wealth is not created by what you earn, but by what you keep. Consult a personal financial advisor to help you develop a plan, so you can increase your net worth with every amount that comes to you. Because without proper financial planning, any increase in your income usually results in an increase in your spending. If you doudt it, consider your last pay rise: chances are your needs grew in proportion to the pay rise, and you are still wondering where that money went.
5. I will build an emergency fund.
Life is so unpredictable that even the job you do or business you run holds no guarantees of permanence. One thing that is predictable though, is that emergencies will confront you at some point. These may be small irritants, such as smashing the tail-light of your car, or a big crisis like the loss of a job or a large, unexpected hospital bill for a family member.
Start by accumulating the equivalent of three months living expenses and slowly increase this to six months worth.
Be prepared.
6. I will plan for retirement.
Consider this fact: if you retire at 60 and live for 30 years until you are 90, you will live almost as long as you worked! And your expenses then could be higher, due to rising food, medical and transport costs.
According to statistics from the Retirement Benefits Authority, not enough working Kenyans are contributing to a registered retirement benefits scheme. Let's change this by starting to put away at least 10% of our monthly income towards retirement.
Do not make the mistake of thinking you are too young to plan for retirement.
There you have it—6 ideas for your 2021-2022 financial year money resolutions to help you get through the Covid-19 pandemic and begin your journey to financial wellness.
Poor financial health not only creates the obvious money problems, but also causes stress, depression, marriage problems and health issues so let's go on this journey together.
I can’t wait to share my success story next year.
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