Time goes by so fast. By mid-year you had planned to increase your savings, make progress towards paying off your debt, start saving for your retirement, your child’s university education or any other financial goal you had in mind, but you realize that you are in the same position you were in when the year started.
Getting started on managing your hard earned money may be harder than it sounds, yet we all agree that financial peace of mind starts with knowing where your money is channeled to, and knowing that you have made appropriate plans for your short and long term goals.
The path to financial peace of mind involves making smart plans for your hard earned money. It also requires getting started the following 5 financial good habits.
Getting started on spending on a budget
Budgeting your money enables you to keep a close watch on your money. Without a budget, you may be inviting unnecessary debt and making it hard to save for the various financial goals you have. A budget may help you discover that your money can stretch further than you thought possible.
“Financial freedom requires making smart plans for your hard earned money”
Getting started on handling your debt
When you are in debt, you need to critically analyze every single item on which you want to spend your money on. With your expenses reduced, you will be able to clear your debt faster, and will avoid the trend of taking a loan to pay off an existing debt.
Once your debt is cleared, it is in good habit to continue to minimize your expenses and continue to live frugally in order to put aside that portion of your income into a savings plan.
Getting started on managing your investments
The key to managing your investment is knowing when to invest, where to invest , when to cut your losses and when to lock in your gains.
Most long term investments offered in the financial service industry require you to maintain your focus on your goal. Take your time to understand the investment tools offered to you by your financial advisor, and do your research on how you can benefit most out of that particular investment.
Getting started on planning for your retirement
If you’re expecting to live off the National Social Security Fund after retirement, you’re in for a disappointment. Your social security fund will not sufficiently cater for your living and health care expenses – which drive up retirement costs for most people.
As a general rule, financial experts recommend individuals accumulate enough to replace at least 70% of their pre-retirement income once they retire. Saving for retirement can put extra money back in your pocket. Putting money into a registered retirement benefits scheme can give you tax savings that amount to thousands of shillings; savings that you can then use to meet more of your financial goals.
Getting started on building your emergency fund
While the amount of your emergency fund will depend on your ability, most experts suggest having at least three months’ worth of living expenses set aside. Having an emergency fund creates a risk-free safety net for you and your family.
You may need to automate deposits in order to ensure that you build your emergency fund. It may take you months or even a few years to build up an adequate emergency savings fund. That’s okay. By starting a savings plan today, you move closer to having a robust emergency fund in the future
In a nut shell, the key to financial peace of mind is knowing how to manage that hard earned money you get so as to achieve financial peace of mind now, and in the long term.
What are your thoughts on getting started in achieving financial peace of mind?