Tips for building wealth after a major financial loss

Losing everything can feel like the end, but what if it’s a new beginning? Financial coach Margaret Njeri breaks down the exact steps to navigate financial setbacks.

Margaret Njeri’s client lost her salon in 2020 during COVID-19. She began selling beauty products from home via WhatsApp groups. With consistency, she grew her list, joined a chama, and reinvested profits. Three years later, she reopened a smaller salon and built an emergency fund. Margaret is here to give tips on how you can rebuild wealth after a financial loss.

Review current financial status

Margaret advises pausing to take stock of current financial reality, income sources, debts, dependents, and assets. She cautions against emotional decision-making but encourages getting clarity on what’s left and what’s urgent.

Create a survival plan

Design a simple 30-90 days’ financial survival plan that centres on essentials, cuts off non-essentials, and has a vision for recovery. Margaret encourages surrounding yourself with supportive mentors or advisors who can offer logic, not fear.

Get on a financial reset wheel

According to her, a good financial reset plan looks like bidding only to your essential expenses, rebuilding a small emergency fund of between three and six months’ worth of savings, and setting new short-term financial goals.

Reinvent yourself

Some of the ways to rebrand yourself are by starting a digital presence around a strength, learning free online courses, networking intentionally, and re-establishing your career or service offering, such as coaching, writing, or speaking.

Spend strategically

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You may wonder whether to stop spending once you have hit financial rock bottom. Margaret recommends spending mindfully, like investing in a skill, a tool, or a network.

“Simply start with strategic spending, and save whatever is left to build up financial security,” she mentions.

Start investing

Once you have three to six months’ emergency savings and a stable income, Margaret advises sticking to a weekly budget. Then begin investing using low-risk options like money market fund apps, Saccos, or collective investment schemes.

“Start with saving small amounts consistently, even Sh 500 per month or Ksh 100 daily in money market funds and Sh 3000 in Saccos,” she says.

Rebuild financial trust in yourself

Plan with small, consistent wins by completing a 30-day no-spend challenge with self-trust growing each day through consistency and self-compassion.

“Also remember to celebrate small wins either weekly, monthly, quarterly, or even yearly,” she affirms.

Restore financial stability

You can seek steadiness with your finances by tracking your daily expenses, having weekly money check-ins, automating savings, paying yourself first, avoiding impulse spending, and learning something new financially each month.

Rebuild wealth

There are overlooked opportunities that women can venture into to rebuild wealth. Some of them are digital coaching, offering domestic skills as services, leveraging SACCOs for low-interest credit, and investing in group investments such as chamas and pooled funds. Margaret urges to rebuild slowly but strategically.

“Avoid emotional risks. Take calculated risks once you’ve rebuilt your financial base with an emergency fund, savings and consistent income,” she says.

Avoid more financial mistakes

As you rise from the financial loss, Margaret urges women to be wary of making more financial mistakes, like chasing high-risk quick fixes.

“It is advisable not to borrow to invest without a plan. You should also avoid living in denial of the situation or comparing your journey to those of others,” she says.

Build financial resilience

Margaret defines financial resilience as the ability to recover from financial setbacks while growing. It can have a strong emergency savings, multiple income streams, controlled financial inflation, insurance and retirement planning, and education planning.