It’s the beginning of the year, a prime time to start focusing on what’s going on with your money. With the right knowledge in place, you can stick to your financial resolutions and end the New Year in a better place than 2020 was.
If like many at this time of the year, you find yourself with no savings, in debt, and no idea where your money is going, then these 5 tips will help you get back on track.
Get set, Ready…
1. Make specific Bite-Size Goals
Goal setting is a powerful, proven way to move you from where you are now to where you want to be. Taking the time to write down what you want to achieve financially will bring you closer to that goal. The smaller and more specific the goal, the more likely you are to achieve it.
2. Know Where Your Money Goes
If you’ve gone through a few personal finance books, you’ll realize how important it is to make sure your expenses aren’t exceeding your income. The best way to do this is by tracking your past expenses and budgeting for future ones. Once you see how taking a bottle or 2 of beer every day adds up over the course of a month, you’ll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting an increase in your salary.
3. Live below your means (and save the difference)
If you routinely run out of money before the end of the month, you are living above your means. Living below your means simply means spending less than you earn. To effectively live below your means, finance experts recommend you spend at most 50% of your monthly income on needs, 20% on wants, and 30% on savings. In fact, keeping your recurring monthly expenses as low as possible will save you big money over time. For example, if you don’t waste your money on renting a luxury apartment now, you might be able to afford to build a house sooner than you ever imagined.
Want to get rich? The secret is to live below your means!
4. Create an Emergency fund
We have all seen the economic impact of the COVID-19 pandemic on the world though the effect in Cameroon hasn’t been as serious as compared to most western nations. Just imagine for 1 second that we had to go through what these nations are going through now…. Alternatively, imagine that you woke up one morning and your car suddenly broke down OR you/a family member is seriously sick OR you lost your job; this is financially DEVASTATING! That is why it’s very important to have a strategy for when things go wrong. Finance experts recommend you SAVE between 3 to 6 months’ worth of your monthly expenses so that in case you got into an unforeseen problem, your emergency fund will act as a buffer. Also, make sure you’re not keeping your emergency fund in a place that’s too easy to access (nkwa can assist you with this).
5. Get another source of Income
Because of the financial risks involved with relying on 1 job for all of your incoming cash, it is critical to consider having at least one additional source of income as this puts you in a better position to be prepared if one source of income fails because now you would have something else to fall back on. Apart from job loss financial security, having multiple sources of income can help you build wealth faster (because you are making more money), achieve more financial goals (e.g. pay off a debt), or even retire earlier if that’s what you want. As you indulge in this quest, just remember that creating multiple income streams can take time and work to build, but you will learn a lot along the way and it will ensure you are on the right path to financial freedom.
That’s it; now you are good to go.
Wishing you the best of the New Year in your finances!
For more financial advice, follow @mynkwa on social media
Nkwa is a “made in Cameroon” mobile app that assists its users save money in a disciplined manner towards achieving goals that matter to them. They also guide their followers with periodic financial tips on how to better manage their money.
For any inquiries, visit our
Website: www.mynkwa.com
OR
Office: Mile 17, Buea. Ntarinkon Credit Union Building
