Money Management
November 11, 2024
Every day we get up, go to work or our businesses and put in so much effort to look for money. It is only natural that we are constantly looking for means to supplement and grow our wealth as much as possible. But seldom do we realise how, when or where to begin.
If you are still a young professional, the kind of life you'll live in your 40s will be determined by your choices in the coming years or even in the coming months. They say life starts at 40. From 40, life has got to be smooth. But for it to happen that way, you have to plan financially first.
Whichever your choice is, whether you intend to build passive income, get the job you have always wanted, or become immortal, you have to know to keep in mind these money hacks.
Investing in yourself is among the best returns on investments you can ever have. Be it investing in acquiring a new skill, developing yourself professionally and personally, growing your creativity or getting a coach.
You have to give to yourself first before you embark on giving to others. It is your responsibility to set aside some time to develop your gift or talents, so you can best serve others.
Investing in yourself is the best life hack. You can never go wrong taking on this venture. The more the skill develops, the greater your value is, and the more you get paid.
Other than direct monetary investment, physical and mental health investments are as pivotal in your long-term well-being and should never take a back seat.
An investment account is the type of account that lets you buy or create an asset with the intention of capital appreciation, profit in terms of dividends, rent, earnings from interest, or any combination of these returns.
An investment account is created in financial institutions like banks and anyone with the right prerequisites is capable of getting one.
A few areas to consider are:
The stock market, for example, is a great area to grow your money and create long-term wealth. With a well diversified portfolio of stocks, you can come close to guaranteed returns annually in the form of dividends that can fuel your other financial plans.
The cons that come with the stock markets are the market's unpredictability. There is always the risk of your money drowning if the market falters.
Another is that the returns are not as immediate as you might desire. When you invest in stocks, think long-term as the returns are slow and take time to accumulate. There is also the possibility that you may lose money or make very minimal gains.
We go to school to learn technical skills to provide solutions in the corporate world. But you are not exactly taught about how you can make money passively by monetising your skills outside of employment.
For instance, social media has proven to be a potent avenue for the monetisation of skills, hobbies and directly converting followers into an income.
You get an income by sharing information about affiliate products or services. Before you start thinking about money, you have to build a monetisable audience.
These basic strategies include:
But having looks is not everything. You need to have a niche, content and engage your audience.
Post-pandemic, we have seen the rise of hybrid working such that you could be working for a startup in California today from your apartment in Thindigua, get paid in dollars while a Mauritius resort is paying you referral fees for customers they are getting from your travel blog and Instagram channel.
School may have equipped us with arithmetic and taught us how to be great employees, model citizens or even how to start brick and mortar businesses, you now have to teach yourself how to take advantage of globalisation to monetise all these skills you have been amassing and expand the possibilities of your income-earning potential.
Budgeting is one of the ultimate money hacks. A budget ensures that you can set aside a portion of your income for savings and investments with every income cycle.
Here is why you need a budget:
You do not necessarily have to revise your budget daily, but it is an excellent guide to help you move toward your financial goals.
There are a lot of people who tend to keep away from budgeting because:
So, budgeting is your ultimate hack if you want to start saving money, cut down on unnecessary expenses, and head toward the financial future you want.
Read Also: 6 Simple Steps to Create a Working Budget
Events happen that can sometimes necessitate us getting into debt. Perhaps we borrow to take care of a medical bill, your car breaks down, you take a loan to expand your business or to pay for your education.
Debt will always have some interest to pay when you repay it, and some debts have a high-interest rate that can also be punitive. This will happen, if you do not take time to compare loan options available to you.
It is important to remember to pay the debt on schedule, especially debt with high-interest rate like debts obtained from shylocks.
Imagine if you took a loan of Ksh10,000 at an interest rate of 25%. You will pay back a whole Ksh2500 on top of the original debt. That is aside from the service fee that you might be charged.
Here are some strategies you could implement to pay off your debt
In our productive years going to work or attending to our businesses, we seldom remind ourselves that a time will come when our productivity will start reducing, and we will have to stop working.
We are mostly content with living for today, trying to enjoy life by spending money here and there to become as comfortable as possible. But we should remember the time we will have after work—the retirement period.
It is best to take on a retirement savings plan from a financial institution. Have a target of the amount you would like to have at the end of it, and set yourself to deposit well-sized premiums to fit the target. That is an individual pension plan.
If you have a good employer, they could offer an occupational pension scheme where the employer makes contributions to your retirement scheme. It is worth noting that your employer may not offer this scheme, but if they do, they are then obligated to follow the rules established under the scheme.
There is also the statutory NSSF scheme readily available for you if the individual and the occupational schemes are not suitable for you. You ideally should contribute much more than the mandatory minimum.
Emergencies happen, will happen and when they do, you would feel so much relieved when you are prepared for them. You want to feel a bit safe and with some tolerable allowance when things don't go as planned. For this reason, it is wise to have an emergency fund at the ready.
An emergency fund will give the flexibility to handle emergencies without going into debt. It could be that your car broke down in the middle of the highway, your house got damaged, or your drainage busted, hospitalisation or loss of employment.
Having enough funds in your emergency funds account will ensure that you will handle that situation comfortably with less stress, and most importantly, you will not get into debt.
Read Also: Easy Steps to Create an Emergency Fund in 100 Days
Have you started saving already? Where are you keeping your money? Are you getting some interest on it?
With so many people willing and looking for vehicles to save, financial institutions have identified this need and come up with different vehicles to suit those needs. This then presents a lot of options from which you can choose.
Some people get very little interest on their savings because they have probably been stuck on a product which they signed up for a long while ago and have not adjusted to the trends in the market.
You do not need to stick to a less paying savings account when there are accounts that offer a lot more money than that you are currently in.
It is always prudent to look for a savings account that will offer good interest on the money that we save. This is ideally higher than the annual inflation rate which for 2021 was about 5.2% with the 2022 annual inflation rate projected to rise up to 7.2%.
It is hard to make decisions that you know will significantly impact your life later on while you are young. You need to remember that the decision-making process is a privilege.
Furthermore, there is no perfect approach to life. It is crucial, though, to make a formal plan as soon as possible, based on these facts and with a little bit of instinct.
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