This archive report was first published on 15 December 2019.
Personal finance is a delicate balance between consumption and savings. The rule of money is simple: save today and you'll save tomorrow. We're not trying to outsmart financial experts, but rather make informed decisions by asking the right questions.
When it comes to personal finances, most solutions lie within ourselves. No one understands our goals better than we do. Therefore, we are our own personal finance professionals.
To succeed in managing personal finances, three essential elements are required: a correct mindset, a toolset, and a skillset.
On December 15, 2019, Robert Ochieng, CEO of Abojani Investments, emphasized the importance of personal finance in a blog post.
The mindset is built by habits that put us in motion to create sustainable wealth. For instance, saving KSh60,000 may seem daunting, but setting aside KSh5,000 every month requires minimal effort.
Reviewing income, spending, debts, and long-term and short-term goals helps identify areas for adjustments. Writing down a budget is essential for a healthy financial future. An accurate monthly budget can help achieve financial goals, whether saving for a car, buying a home, or raising capital for a business.
Using budgeting apps like iSave, Fudget, Mint, or YNAB, or an Excel spreadsheet, can help track expenses and save thousands each year. It's recommended to save at least 10% of net income for a start.
The toolset refers to the necessary tools for managing personal finances, including budgeting apps and financial products like standing orders, lock accounts, and money market funds.
The skillset involves awareness of financial products, investments, and options available. Personal finance is not a one-size-fits-all approach; making a connection between financial markets and individual needs is crucial.
For example, paying loans on time improves credit ratings, increasing chances of securing future loans. Understanding individual scenarios and applying relevant strategies is essential.
