Are you as good with money as you think?
SEE ALSO :Why you should invest in stocksIdentify the emotional and psychological triggers that cause you to spend. When you remove those triggers, you’ll remove the temptation and opportunity to overspend. The small purchases one makes often can really add up, and when checking your expenses, you’ll find that you have spent more than you intended to. Keep track of your expenses as this helps you account for every shilling spent. Once you know where the money is going, you’ll be in a better position to cut back in the areas you need to. How do we identify an accountability partner?
SEE ALSO :Firms warn Kenyans of fake job alertsAn accountability partner should be someone you respect and who’s financially disciplined. Be clear on what you want to get out of the partnership and what you think you’ll need, which will evolve with time. It helps to set expectations so that your partner knows what you’re hoping to get out of the relationship. The person’s ethics shouldn’t be questionable. Don’t choose a friend as an accountability partner as you’ll need to have someone who’s objective and is not worried about hurting your feelings because they’re too close to you. What saving patterns can we create so we don’t spend too much? To get started, budget for your money, save first before spending, identify your savings vehicle, and identify your short and long-term goals. For short-term goals, vehicles such as money markets or fixed deposits ensure your funds earn interest even as you pack funds for long-term investments. Set up a standing order with your bank that ensures you transfer funds to your savings vehicle immediately income hits your account. How do we separate what we want from what we need before spending? Naturally, there are items you can do without, which you can categorise as ‘wants’. You can target a future date to buy a want, and start setting aside funds for this. However, a need is what you must have and therefore must feature in your budget as a priority or immediate need. The 50/30/20 budget rule holds that 50 per cent of your after-tax income should be spent on your needs, 30 per cent should go to wants, and 20 per cent should go to savings. This budgeting rule of thumb allows you to spend 30 per cent of your take-home pay on the things you want. They key, however, is to separate your needs from wants early so you’re more aware of how you are spending your money. In what ways can we track our spending? Budgeting is the top tool that you can utilise in tracking expenditure. If followed strictly, it can be helpful and within a few months, you’ll be able to identify areas where there’s been overspending. Adjustments can then be made for the following months’ budgets. But keep in mind that when preparing a budget, it has to be realistic, otherwise you may find yourself adjusting it too often. Is rewarding yourself a bad spending habit? No. You must always plan to reward yourself, but this should feature in your budget.
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