Your 2015 Financial Guide

Happy New Year. Over the last couple of weeks leading to this moment I have been talking about what to do different, New Year Financial Resolutions, how to think differently about spending, understanding what you really want etc.  Basically getting us into the right frame of mind for this year.  Today we are going to go all practical and go step by step on what we can do better with our finances for first half of the year. Retain a copy of this article and see for yourself if anything has changed by the time six months are over. Many will read this article.  Fewer will take action. I dare you to be one of the people that do and write to me about your progress. You might just win a scholarship into the Centonomy course.

January:  This is always a tough month for most people. It is actually hard to think about your money in a more longer-term aspect when the sins of December have caught up with you.  Now you regret how you justified expenses by saying “Tis the season”. The math just doesn’t add up. The first action is to save three hundred shillings a day. Every day find somewhere to put just three hundred shillings.  It can be your piggy bank, a mobile account, under the mattress etc. At the end of the month you can even transfer what you have accumulated to a savings account. Stretch yourself to find three hundred shillings and just forget about it. If you do this you will note that at the end of the month you will have about nine thousand shillings (300 X30). Continue doing this throughout the rest of the other months.

February:  Write out your plans for the year.  If you have done the `January challenge you are in a better position to do this.  You will have noted that your piggy bank now has about nine thousand shillings in spite of how broke you felt.  The bug of possibility will begin to bite. What do you want to achieve this year?  Many times people over think this process and do grandiose five-year plans.  However if you cannot commit to the action plans for one year you are never going to achieve five-year goals. If you have been setting five year plans for the last five years and nothing has happened, try and do it differently. The goals you write should have an amount attached.  For example – increase share portfolio by Kshs 120, 000.   This means you put in Kshs 10, 000 per month.  Pay down car loan by an extra 180, 000.  This means you would find an extra Kshs 15, 000 per month.  Remember from your January exercise you already found nine thousand shillings every month so you just need to figure out the difference.

March – April: You have now seen you can actually save money. The adhoc spending of the festive season and financial pressure of the New Year have mellowed.  Some normalcy has resumed with your spending. You have written down your goals. Perfect time to work on a budget. Many times we do a budget because we reckon that’s what we are supposed to do and many times that motive does not work.  You do budget so that you can manage your expenses in a way that doesn’t compromise your goals. To do this right you’ve firstly got to understand what you are spending.  From the first day of March to last day of this April, track all your expenditure. It usually takes about two months to get this right. Note your spending on your phone because it’s possibly the one item you always have with you. Track even the smallest of expenses. By the end of the April you will have tracked your spending for two months and you will have a realistic foundation on which to do a budget.  You will note spending patterns that you were not really aware of and where there was wastage.

May: Challenge yourself to find ways of generating additional income. You have done a budget and know where your money is going.  Many people will come face to face with the fact that even if they manage expenses well, extra money does need to be coming in so that they can achieve their goals.  Use your skills, hobbies etc. to generate additional income. Even if it makes an extra one thousand shillings do it. This is the key that unlocks generating ten thousand next time.  A student in one of our Centonomy classes started making cakes to sell at work.  She is now making an extra twenty thousand shillings every month. I have a young student who started rearing chicken in her parents back yard. I know countless others who are doing consultancy work in their spare time.  You might just connect with the entrepreneurial spirit in you by trying this out.  You never know until you try. This is an extremely powerful thing for you to do for yourself as it starts putting you in control of your earning power.

June: Learn something new about an investment that you did not know about. Maybe you have shares but don’t exactly know how to choose the companies to invest in.  Make a point of finding out.  Maybe you want to invest in property at some stage.  Go out and do the research irrespective of whether or not you have the money. You would like to one day build a home in a certain area. Start looking around. You would like to start a business.  Talk to someone who can give you practical advise. This process opens up your thinking and awareness of opportunities.  Even if you don’t have the money you will find that you will start being more creative with “how you can do it” rather than getting stuck with “why you can’t do it”.